Monday, April 13, 2009

Guarding against defamation liability

Courtesy of my friends at is the story of the dangers that lurk when distributing information about an employee’s termination.

Staples fired one of its salesmen, Alan Noonan, after an internal audit discovered he had deliberately falsified expense reports. The day after his termination, Staples’s Executive Vice President sent the following email to all of the company’s North American employees:

It is with sincere regret that I must inform you of the termination of Alan Noonan’s employment with Staples. A thorough investigation determined that Alan was not in compliance with our [travel and expenses] policies. As always, our policies are consistently applied to everyone and compliance is mandatory on everyone's part. It is incumbent on all managers to understand Staples[’s] policies and to consistently communicate, educate and monitor compliance every single day. Compliance with company policies is not subject to personal discretion and is not optional. In addition to ensuring compliance, the approver’s responsibility to monitor and question is a critical factor in effective management of this and all policies.

Noonan sued Staples for defamation based on the content of the email. Even though the contents of the email were truthful, the court, in Noonan v. Staples, Inc. (1st Cir. 2/13/09), still found that Noonan could proceed to trial on his claim because a jury could conclude that the email was sent with what is called “actual malice.” The court focused on three key facts:

  1. In his 12 years with Staples, it was the first post-termination email in which the Executive Vice President ever referred to the terminated employee by name.

  2. The EVP could have sent the email to cover his own misfeasance in failing to detect widespread expense report abuses.

  3. Because many of the employees who received the email did not travel, they had no reason to be advised of the travel policy or its enforcement.

Ohio law grants employers a privilege to make truthful disclosures about an employee’s job performance. Ohio’s statute, however, has an exception for the disclosure of information “with the knowledge that it was false, with the deliberate intent to mislead the prospective employer or another person, in bad faith, or with malicious purpose.” The Noonan case provides insight in how to avoid an inference of a malicious purpose when giving job performance information.

  1. Consistency. If your company has a policy or practice in what types of information it discloses, stick to that policy or practice. Giving more than what is customary for your business, even if truthful, could lead one to conclude that some ulterior motive to harm motivated the disclosure of additional information.

  2. Narrowness. Information should only be disclosed on a need-to-know basis. If information is sent to people who have no reason to receive it, one could infer a motive to smear one’s reputation, even if the information is truthful.

As makes clear, “in the down economy, workplace defamation lawsuits are on the rise.” Being truthful and consistent, in what you say about employees, and narrow in to whom you say it, is the best defense against such a claim.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or