MEMORANDUM

To: Osborne Cox, Attorney at Law From: Elizabeth Eakin Date: November 20, 2009 Re: Gibbons matter (file no. 09-034); workplace defamation

I. Question Presented In New Mexico, does a manager commit actionable libel of an employee if he makes a false intracorporate report alleging the employee has committed illegal acts and implying unfitness for employment? II. Brief Answer Possibly yes. In New Mexico, a cause of action for defamation exists when there has been any unprivileged publication of a defamatory, false statement of fact, understood to be defamatory by the party receiving the information and which the publisher knows is false, negligently fails to realize is false, or publishes with malice, which proximately causes actual injury to the party concerned. See UJI 13-1002(B) NMRA 2009. Words tending to injure ones profession or attributing criminal or immoral behavior are defamatory per se. Intracorporate communications are publication for the purposes of defamation. Such statements are protected by a qualified privilege if made pursuant to a public or private duty; however, this privilege will be defeated if the plaintiff can show that the privilege has been abused. III. Statement of Facts Our prospective client, Peter Gibbons, was terminated by his employer, Initrode, on November 5, 2008. Mr. Gibbons believes that he was the victim of defamation by a supervisor at Initrode, and that this defamation led to his termination. In mid-2008, Initrode announced that the company would lay-off some employees to reduce operating costs, and would consider seniority and performance reviews in determining
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who would be terminated. In October, Gibbons supervisor Bill Lumbergh submitted a performance review that characterized Gibbons performance as average in job performance and poor in areas of attitude and adherence to policies and procedures. When Gibbons was given a copy of the report, he met with Lumbergh to discuss it and refused to sign the performance review. After their meeting, Lumbergh sent a letter to his superiors at Initrode that explained the poor performance review and characterized Gibbons behavior at work as bizarre and unstable and his performance as erratic. In this letter, Lumbergh claimed that Gibbons threatened Lumberghs vehicle, stole computer equipment, dismantled office furniture, and carried a firearm to the office. A few days after Lumbergh submitted this letter, Gibbons received notice that he was being terminated by Initrode. The notice stated the reason for termination as a reduction-inforce attributable to redundancies in the merged companies and a general economic slowdown. Lumbergh assumed Gibbons position at Initrode after the lay-offs and corporate restructuring. In December of 2008, Gibbons reviewed his personnel file and discovered Lumberghs letter detailing the alleged crimes and strange behavior. Initrodes Chief Human Resources Officer told Gibbons that Lumberghs review and letter might have contributed to the decision to fire him. The officer further opined that no corporation would want an employee with the characteristics Lumbergh attributed to Gibbons. Mr. Gibbons consulted us to determine if he can successfully bring a claim against Lumbergh. IV. Discussion Mr. Gibbons account of events indicates that Bill Lumbergh published defamatory statements of fact about Mr. Gibbons to third parties within Initrode, which caused Mr. Gibbons

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harm. Although intracorporate publications are conditionally privileged, this privilege will be defeated if the plaintiff can show it has been abused. If the statements made by Lumbergh are proven false, the nature and circumstances of the reports support a finding of malice, which will make the communications actionable. An action for defamation will succeed if the plaintiff can show that he was the subject of a defamatory false statement of fact which was negligently or intentionally published without privilege and which proximately caused him harm. UJI 13-1002, supra. A communication is defamatory per se if it imputes to the plaintiff, inter alia, (1) the commission of a crime of moral turpitude, (2) unfitness to perform duties of employment or the want of integrity in discharging such duties, or (3) a falsity which prejudices him in his profession. Marchiondo v. N.M. State Tribune, 648 P.2d 321, 337 (N.M. Ct. App. 1981). A statement is of fact, rather than opinion, when it can be either proved or disproved, or when it is understood as based on undisclosed facts which would themselves be defamatory. Id. at 332. Even if defamatory per se, false statements of fact are only actionable if published to a third party. In New Mexico, intracorporate memos and other internal business communications are deemed published, but their publication is protected by a qualified privilege. Hagebak v. Stone, 61 P.3d 201, 208 (N.M. Ct. App. 2002). A qualified privilege is a defense to defamation that applies to statements made in good faith during the discharge of a public or private duty. Id. at 205. Thus, an employer is not liable for making a false statement about an employee, upon the condition that the statement is made in good faith, for an appropriate purpose and to a party who has a legitimate interest in the subject of the statement. Zuniga v. Sears, Roebuck, & Co, 671 P.2d 662, 665 (N.M. App. 1983), (citing Gengler v. Phelps, 589 P.2d 1056, 1059 (N.M. App. 1979)).

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A qualified privilege will be defeated if the plaintiff can show that it has been abused. Abuse arises out of the publishers lack of belief, or reasonable grounds for belief, in the truth of the alleged defamation; by the publication of the material for an improper use; by the publication to a person not reasonably necessary for the accomplishment of the purpose; or by publication not reasonably necessary to accomplish the purpose. Mahona-Jojanto, Inc. v. Bank of N.M., 442 P.2d 783, 786 (N.M. 1968), quoted by Gengler 589 P.2d at 1059, cited by DiMarco v. Presbyterian Healthcare Servs., 160 P.3d 916, 920 (N.M. App. 2007). Some courts have interpreted the existence of a privilege as effectively removing from false defamatory statements the implication of malice, which is presumed when publication is unprivileged. Gengler, 589 P.2d at 1059, citing Ward v. Ares, 223 P. 766 (N.M. 1924). In this view, proof of actual malice is proof the privilege has been abused; it may be shown from all the facts and circumstances surrounding the case. Ward, 223 P. at 767-68. Actual malice implies hatred or ill will or wanton disregard of the civil obligations of the defendant toward the plaintiff. Colbert, 142 P. at 149. The court may consider whether the statements benefitted the person to whom the publisher owed the duty that gave rise to the conditional privilege, or instead benefitted another. Ward, 223 P. at 768. [F]alsity, in the absence of probable cause, will prove malice. Id. Probable cause includes reasonable reliance on the statements of others. See Zuniga, 671 P.2d at 666. If the defamatory statements are in manifest excess of the occasion; if they contain strictures on motives and conduct not warranted by the facts, or if they go beyond what is reasonable in imputing crime, this is also evidence of actual malice. Ward, 223 P. at 769, quoting Atwill v. Mackintosh, 120 Mass. 177 (Mass. 1876), internal citations omitted. Actual malice may also be demonstrated by refusal to retract the defamatory statement or by repetition or publication of similar defamatory statements; however,
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such repetitions are not evidence of malice if they were made in good faith within the scope of the defendants duties. Colbert, 142 P. at 149; Vigil v. Rice, 397 P.2d 719, 722 (N.M. 1964); Bookout v. Griffin, 639 P.2d 1190, 1193 (N.M. 1982); Zuniga, 671 P.2d at 666. Mr. Gibbons narrative indicates a good case against Bill Lumbergh if we are able to prove that Lumberghs statements were false. It would be difficult for Lumbergh to dispute that his accusations of criminal and delinquent acts were statements of fact. The defense may argue that statements in his letter attributing bizarre, unstable, erratic behavior to Gibbons or the report characterizing his attitude and adherence to company policies and procedures as poor were statements of opinion. We should argue that such reports would be useless to Initrode unless based on undisclosed facts, and because they were intended to convey defamatory implications, these characterizations are actionable. Nearly all of Lumberghs statements impute to Gibbons crimes of moral turpitude or lack of integrity in discharging his professional duties; thus they are defamatory per se. Showing proximate cause should not be difficult. The announcement that performance evaluations would determine which employees would be fired, the Human Resource Officers admission that the report and letter played a part in Gibbons firing, and his desire not to associate with or employ Gibbons because of the letters imputations all strongly support a finding that the defamation caused Gibbons to lose his job. Lumbergh wrote the defamatory report and letter of explanation in the regular discharge of his duties at Initrode, so the publication is conditionally privileged. He submitted them to his supervisors and the Chief of Human Resources, who are appropriate parties with a legitimate interest in the behavior and performance of their employee Gibbons, and who requested such reports for use in determining which employees would be terminated. Indeed, if Lumbergh had

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probable cause to believe the accusations were true, then he was duty bound to report them. Yet we can defeat the privilege by showing that the reports were made in bad faith or for an improper purpose, by using the facts and circumstances surrounding the case to show actual malice. Lumbergh will be liable for publishing false statements unless he had probable cause to believe they were true. In Zuniga, corporate officers were not liable for intracorporate publication of false defamatory accusations because they reasonably relied on information from a store security guard whose job it was to know and report such criminal activity. 671 P.2d 662 at 666. Lumbergh could claim that he relied on others for some of the information in his statements, but his reliance must have been reasonable. Furthermore, the accusation that Gibbons threatened Lumberghs vehicle during their performance review meeting is a first-person account which Lumbergh could not reasonably believe if it was false. In Gengler, the court explained that it found no abuse of privilege in part because the plaintiff could not show that the defendant had any bad-faith motive for the statements she published. 589 P.2d at 1059. We can show that Lumbergh benefitted directly from the publication of the false statements: despite the elimination of his position, he did not lose his job; instead, he took over Gibbons job duties. We can also present Gibbons five-year record of excellent performance as evidence that Lumbergh should have known the first report was untrue. He had a duty to withdraw a false statement, but refused to do so. Instead, Lumbergh published another related and substantially similar report. If we show the statements contained in this report were also known to be false, the republication is further evidence of malice. The most troubling concern in this case will be evidence of falsity. If we rely heavily on Lumberghs lack of reasonable belief that Gibbons threatened his car, our only evidence of falsity is the testimony of a plaintiff who has been convicted of a crime of moral turpitude. Our

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position will be stronger if we find evidence to show that Lumbergh could not have had probable cause to believe that Gibbons committed the criminal and deviant acts he described in his letter, and/or that Gibbons attitude and adherence to policy and procedure could not, upon the facts, be reasonably believed to have been poor. If we can show the falsity of the statements, we should be able to prove all elements of a defamation claim. Because of the first-person nature of Lumberghs statements, a showing of falsity will be very good evidence that he did not reasonably believe they were true. Along with the supporting evidence of improper motive and republication of similar statements, this falsity without probable cause is proof of malice, which renders the qualified privilege for intracorporate communications functus officio. V. Conclusion In order to succeed in a defamation claim against Lumbergh, we must prove that he published defamatory, false statements of fact which damaged our client, and that the publication was not privileged. Because intracorporate communications are conditionally privileged in New Mexico, we may defeat the privilege by showing it was abused. Proof that Lumbergh published the reports for an improper purpose or with knowledge of or disregard for their falsity is proof of malice, which is proof of abuse and removes the privilege. If we can show that the statements were false, the evidence heavily supports a showing of malice.

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