Court Opinion

ID: 9623632
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:38:45.450197+00
Date Added: 2024-06-11T18:05:32.867958
License: Public Domain

OPINION
By the Court,
Shearing, J.:
This is an appeal from an order of the district court dismissing a complaint pursuant to NRCP 12(b)(5) for failure to state a claim upon which relief can be granted.
Appellant Ruth Simpson (Simpson) was employed by respondent Kelly Temporary Services, Inc. (Kelly Services) from January 14, 1994, until February 25, 1994. Simpson was assigned by Kelly Services to work at the Ethel M. Chocolates Inc. candy factory (Ethel M.). Ethel M. is a subsidiary of Mars Inc. (Mars), a corporation incorporated in Delaware and doing business in Nevada. Shortly after her assignment, Simpson was contacted by *190De-Andrea Arcenaux (Arcenaux), Senior Supervisor of Kelly Services, and informed that her assignment at Ethel M. had been terminated. The next day, Simpson met with Arcenaux and was told that she was being terminated as a Kelly Services employee because she had sexually harassed a female co-worker at Ethel M. Arcenaux told Simpson that a co-worker at Ethel M. had alleged that she had been chased around the parking lot by Simpson.
On May 13, 1994, Simpson filed a complaint against Kelly Services, Ethel M. and Mars, raising the following causes of action: (1) wrongful discharge in violation of public policy; (2) breach of implied covenant of good faith and fair dealing; (3) intentional infliction of emotional distress; (4) defamation; (5) negligence; and (6) respondeat superior. Mars, Ethel M. and Kelly Services filed motions to dismiss pursuant to NRCP 12(b)(5).1 A hearing was held in the district court, and the district court subsequently entered an order dismissing all causes of action for failure to state a claim upon which relief could be granted. Simpson appeals, arguing that the district court erred as a matter of law by granting the motion to dismiss.
We conclude that the district court properly dismissed all the causes of action except the cause of action for defamation.
The standard of review for a dismissal under NRCP 12(b)(5) is rigorous as this court must construe the pleading liberally and draw every fair inference in favor of the non-moving party. Vacation Village v. Hitachi America, 110 Nev. 481, 484, 874 P.2d 744, 746 (1994). All factual allegations of the complaint must be accepted as true. Id. A complaint will not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff could prove no set of facts which, if accepted by the trier of fact, would entitle him or her to relief. Id.
Simpson’s cause of action for defamation alleges that the defendants published to Simpson’s co-workers that she sexually harassed co-workers and was dismissed for sexual harassment. In order to establish a prima facie case of defamation, a plaintiff must prove: (1) a false and defamatory statement by defendant concerning the plaintiff; (2) an unprivileged publication to a third person; (3) fault, amounting to at least negligence; and (4) actual or presumed damages. Chowdhry v. NLVH, Inc., 109 Nev. 478, 483, 851 P.2d 459, 462 (1993).
*191The defendants claim that Simpson has not alleged the essential element of publication because the alleged defamatory statements were made to agents and employees of the defendant corporations who are not third persons for defamation purposes. In Jones v. Golden Spike Corp., 97 Nev. 24, 623 P.2d 970 (1981), this court adopted the rule that agents and employees of a corporate defendant in a libel action are not third persons for the purposes of publication of a libel. This court quoted Prins v. Holland-North American Mortgage Co., 181 P. 680 (Wash. 1919) with approval as follows:
Publication of a libel is the communication of the defamatory matter to some third person or persons. Here the communication was sent from the main office of the company to its branch office. . . . Agents and employes [sic] of this character are not third persons in their relations to the corporation, within the meaning of the laws pertaining to publication of libels. For the time being, they are a part and parcel of the corporation itself, so much so, indeed, that their acts within the limits of their employment are the acts of the corporation. For a corporation, therefore, acting through one of its agents or representatives, to send a libelous communication to another of its agents or representatives, cannot be a publication of the libel on the part of the corporation. It is but communicating with itself.
97 Nev. at 26, 623 P.2d at 971, quoting Prins v. Holland-North American Mortgage Co., 181 P. at 680-81.
In adopting this rule this court rejected the position of the Restatement (Second) of Torts § 577(1) that publication of defamatory material to anyone other than the person defamed, even to agents, is publication for the purpose of making a prima facie case of defamation. See Restatement § 577(1) cmt. e.; see also W. Page Keeton, et al., Prosser and Keeton on Torts, § 113 at 797-802 (5th ed. 1984). The Restatement recognizes that there are privileges for certain intracorporate communications, but such privileges are defenses, not part of the prima facie case. See Restatement (Second) of Torts §§ 593-96 (1977).
The instant case exemplifies why the Restatement provides a better rule when dealing with corporations. The circumstances of the communication of the allegedly defamatory material are uniquely within the knowledge of the corporation and its agents. It is unfair to put the burden on the plaintiff to determine and allege the circumstances of communication within the corporation before she can make a prima facie case. Therefore, the circumstances of communication are more appropriately an ele*192ment of the defense to an action of defamation rather than an element of the plaintiff’s prima facie case. See also W. Page Keeton, et al., Prosser and Keeton on Torts, (5th ed. 1984, § 113, 797-802.
Another practical problem with the approach this court took in Jones is that the law of defamation is meant to provide an incentive for people not to spread lies that can injure others. Since most people spend a good part of their time, effort and lives at their work, and have many colleagues, friends and acquaintances there, to allow an employer to circulate lies around the workplace with impunity is particularly damaging.
Even cases like Prins v. Holland-North American Mortgage Co., and Mims v. Metropolitan Life Ins. Co., 200 F.2d 800 (5th Cir. 1952), on which this court relied in Jones, recognize the limitation that the communication of the alleged defamatory material is only privileged if covered in the regular course of the corporation’s business. It is unfair to require the plaintiff to plead and prove facts which are peculiarly within the knowledge of the corporate defendant, such as the circumstances of intracorporate communications.
This court adopts the position of the Restatement (Second) of Torts § 577(1), and overrules the position taken by this court on the issue of publication of defamatory communications within corporations in Jones v. Golden Spike Corp., 97 Nev. 24, 27, 623 P.2d 970, 971 (1981). Corporations may have the defense of privilege to allegations of defamation, but the burden of alleging and proving the privilege are on the defendant corporation, not the plaintiff.
For the reasons set forth above, we reverse that part of the district court’s order dismissing Simpson’s cause of action for defamation. The order is affirmed in all other respects.
Rose, J., and Adams, D. J., concur.2

NRCP 12(b)(5) provides that a claim may be dismissed for “failure to state a claim upon which relief can be granted.”