In addition to wrongful termination claims brought by terminated employees, employers also face an additional cause of action for slander.  In a recent appellate decision, The Nethercutt Collection v. Regalia, the Plaintiff was terminated from his employment at a classic car museum. Regalia asserted causes of action for wrongful termination in violation of public policy, tortious interference with contract and advantageous business relations and opportunities, and slander. Regalia’s tortuous interference claim was dismissed prior to trial, and the jury rejected his wrongful termination claim. The jury found that Regalia had suffered no noneconomic damages, but still awarded him $750,000 in damages for harm to his reputation for statements made by Defendants about Regalia after he was terminated. Defendants appealed the jury’s finding.

Slander

The trial court focused on two statements made by the employer in this case for Regalia’s slander claim. The first statement made by the employer was that Regalia demanded a finder’s fee for assisting the museum in acquiring a classic Talbot-Lago car worth $2.3 million, and that Regalia was not entitled to the fee. Second, the employer stated that other employees would not work for Regalia and would leave if he had remained employed.

Civil Code section 46 provides:

Slander is a false and unprivileged publication, orally uttered, and also communications by radio or any mechanical or other means which: 1. Charges any person with crime, or with having been indicted, convicted, or punished for crime; 2. Imputes in him the present existence of an infectious, contagious, or loathsome disease; 3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits; 4. Imputes to him impotence or a want of chastity; or 5. Which, by natural consequence, causes actual damage.

A slander that falls within the first four subdivisions of Civil Code section 46 is slander per se and require no proof of actual damages. A Slander that does not fit into those four subdivisions is slander per quod, and special damages are required for there to be any recovery for that slander.

The appellate court rejected Regalia’s argument that the two statements at issue in the case are slander per se:

A person can make a claim for money that is rejected as not being justified, and still not be viewed as having committed an act that reflects negatively on that person. Thus a statement about such a claim does not necessarily “directly injure him in his profession, trade or business” (Correia v. Santos, supra, 191 Cal.App.2d at p. 852) so as to fit within subdivision (3) of Civil Code section 46. (See Gang v. Hughes (9th Cir. 1954) 218 F.2d 432 [alleged statements that a plaintiff’s attorney refused to settle a case until he was paid and that he was paid because he demanded immediate payment not slander or libel per se].) Likewise, the statement that Regalia was fired because other employees would not work for him and would leave if he remained employed does not, on its face, clearly fall within subdivision (3) of Civil Code section 46. That one or more employees do not want to work for someone, without more, again, does not necessarily reflect adversely on the person. The employee or employees might not want to work for a person because of the person’s work ethic or rectitude, or legitimate business policies. Those statements may by “natural consequence” cause plaintiff actual damages. (Civ. Code, § 46, subd. (5).) But that makes them slander per quod and requires proof of actual damages.

Therefore, the appellate court overturned the trial court because the jury specifically found that Regalia did not suffer actual damages.

Even though the employer succeeded in this case, it presents a good reminder to employers to be careful in communications to others about the reasons why certain employees were terminated. The best approach is to not discuss the reasons for an employee’s termination with any employees in the organization unless they have a need to know.

The case can be viewed from the court’s website for a short period of time in PDF or Word.