Defamation Case Alleging False Statements on a Termination Form*

This is a review of a defamation case. In this case an employee of a national restaurant chain filed a lawsuit contending a breach of contract, and defamation of character. The breach of contract action arose when the employee was terminated from his job as the manager of a chain restaurant.

The corporation had terminated the manager based on the performance evaluation conducted by one of its regional managers. In the evaluation, the regional manager had noted, among other issues, a number of allegations of sexual harassment made by employees of the restaurant against the manager.

The manager felt his termination was in breach of his employment contract. He also felt the notifications of his termination sent out by the corporation constituted defamation since they included the allegations of sexual harassment.

The manager retained an attorney and filed a suit asking for $200,000 in damages from the breach of contract and $3 million in damages from the defamation of character.

Statement of Facts...

Harvey Donald first became an employee of Johns and Company, Ltd. in 2009. At the time he was hired as an hourly worker. His duties mainly involved operating the cash register and serving customers.

By 2010, Donald was promoted to assistant manager. His duties changed, and although he still worked as a cashier and server, he was also placed in charge of hourly workers' schedules, tabulating cash and credit card information for the day, and other managerial duties. He reported directly to the manager of the restaurant. 

In January 2011 the manager of the restaurant was promoted and transferred to the corporate headquarters. Donald was then promoted to manager.

Things seemed to go well for the first month or two, but beginning in the third month some employees noticed Donald making obscene jokes in front of female employees. Soon after, his remarks escalated into direct statements to some of the female employees commenting on their anatomy or their private lives. 

Those remarks further escalated into instances in which Donald asked some female employees to stay after the restaurant closed, purportedly to discuss their salary raises. Most of those discussions though, turned out to be requests for sexual favors.

Several employees began to send emails to corporate complaining of Donald. They said he made them feel uncomfortable and considered his actions and statements to be sexually harassing. The restaurant also began to experience a higher than normal turnover rate, with a significantly higher number of female employees resigning within the last two months.

Johns and Company contacted regional manager Cynthia Garcia and sent her to the restaurant to investigate the allegations and to discuss other issues related to the restaurant's performance. When they met, Donald denied the allegations of sexual harassment and blamed the restaurant's lagging performance on the economy.

Three days later, Donald's employment was terminated. He received his termination notice via telephone from the Human Resources Director for corporate. The notice was followed by an email and certified letter. All three notices made it clear his termination was based upon several issues. One of them was the accusation of his sexual harassment of female employees.

The Lawsuit...

Donald retained local counsel and filed this defamation case against corporate alleging breach of his employment contract and defamation of his character based upon libel. Donald contended his termination was wrongful and based solely upon innuendo and conjecture. 

He further contended the termination notices he received constituted libel as both were was seen by third parties including secretaries at corporate and others who may have been involved in the creation of the termination notices.

Donald sued for damages for breach of contract in the amount of $200,000 and for defamation of his character in the amount of $3 million.

Johns and Company responded to each of Donald's claims. They contended they did not breach the contract. Donald's termination, they said, was based wholly upon the terms of the employment contract executed by Donald when he was promoted to manager. A clause in that contract allowed corporate termination power based upon what they considered to be "actions of any employee which constituted acts of moral turpitude."

They also contended that they had not defamed Donald's character. They cited multiple U.S. Supreme Court rulings which consistently held truth as an absolute defense. Corporate was quick to point out the letter and email did not state Corporate believed the allegations of the employees to be true.

Instead, Corporate stated his termination was based upon their receipt of complaints of sexual harassment. Corporate contended they had no way of knowing if the allegations were true or not. They also subtly implied they really didn't care. What they cared about where the allegations themselves which accused Donald of sexual harassment. 

In that regard, corporate claimed they did not defame Donald by communicating to him the allegations made by some of the female employees. Corporate suggested Donald's defamation case might better be tried against those who actually accused him of sexual harassment, and not Corporate.

Outcome...

The Court reviewed the evidence admitted in the defamation case and heard the arguments of counsel. Subsequently the Court issued its opinion. In part it stated:

The evidence received by this court included the original contract of employment between the Plaintiff and the Defendant. We find the terms related to employee termination based upon 'actions of moral turpitude ' to be marginally ambiguous. The Court is charged with deciding if that ambiguity should be interpreted in favor of the Plaintiff or the Defendant.

We listened to the testimony of those employees who testified under oath about the nature of the allegations. Those allegations included statements by the Plaintiff to his employees which were crude and vulgar, leaving little to be interpreted. Forcing a company to have to specifically define in their employee contracts the exact details of the type of sexual harassment which might subject an employee to termination would be wholly against public policy. 

Many years earlier, U.S. Supreme Court Justice Potter Stewart, when commenting on pornography said it best in Jacobellis V. Ohio, 1964. He said "I know it when I see it". We find Justice Stewart's comments to apply here. For the Defendant to have to specifically state in its employment contracts each specific word or phrase which constitutes sexual harassment would be an unfair burden. We just know it when we hear it.

As to the Plaintiff's further allegations of defamation, we again must find for the Defendant. The contents of the notices to the Plaintiff were merely recitations of the emails and letters the Defendant received from its employees. The Defendant made no comments on the veracity of the statements; rather the Defendant merely relayed to the Plaintiff that which was communicated to them by others.

We therefore find for the Defendant on both causes of action.