Monday, March 23, 2009
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Court Reverses Slander Damages Against Sylmar Car Museum
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal has reversed a $750,000 damage award based on a former employee’s slander claim against The Nethercutt Collection automobile museum in Sylmar.
Reversing the decision of Los Angeles Superior Court Judge Susan Bryant-Deason, Div. Five ruled Thursday that statements by Jack B. Nethercutt II and the museum that Michael Regalia had demanded a commission to which he was not entitled, and was fired because other employees had said they did not want to work for him, were not slander per se.
Nethercutt’s father, J. B. Nethercutt, founder of the Merle Norman Cosmetics Company, recruited Regalia to work on his private automobile collection, known then as the Merle Norman Classic Beauty Collection.
In 1995 the elder Nethercutt established The Nethercutt Collection as a not-for-profit foundation funded by his estate to operate an automobile museum with restoration facilities. He appointed Regalia as president of the museum.
The Nethercutt Collection museum features over 250 American and European automobiles dating from 1898 to 1997, and also houses a research library and archival materials.
When J. B. Nethercutt was hospitalized in August 2004, his son assumed control of the overall operations of The Nethercutt Collection, subject to his father’s approval.
After his father died in December 2004, J. B. Nethercutt II claimed Regalia had demanded a 10 percent “finder’s fee” for his work acquiring a rare 1937 Talbot-Lago Type 150-C-SS/Sport Coupe for the museum. The car, one of only 14 in the world, had an appraised value of $2.3 million.
Regalia testified that he had merely requested a raise based on his role in obtaining the donation of the car to the museum and his belief that he should be rewarded for having kept the museum under budget every year he had served as president.
Nethercutt subsequently terminated Regalia’s employment.
Various museum employees testified that Nethercutt and his wife, a Nethercutt Collection board member, told employees that Regalia had been fired because of his finder’s fee demand and because employees had threatened to leave the museum if Regalia remained employed there.
Betty Locke, the woman who donated the Talbot-Lago to the museum, testified that Nethercutt had reiterated those same reasons to her.
Regalia eventually filed suit against the museum for wrongful termination in violation of public policy and against both the museum and Nethercutt for slander
The jury rejected Regalia’s wrongful termination claim, but found the museum and Nethercutt had slandered Regalia. It found no actual noneconomic damages, but awarded Regalia $750,000 for harm to his reputation.
The Civil Code defines slander as an orally uttered false and unprivileged statement about a person which accuses him of a crime, carrying an infectious disease, imputes to him impotence or a lack of chastity, or directly injures him in respect to his profession or business.
Writing for the appellate court, Justice Richard M. Mosk explained that a statement meeting these requirements is slander per se, and requires no proof of actual damages. But, he added, slander that does not is slander per quod, and special damages are required for any recovery.
Reasoning that a person can make a claim for money that is rejected as unjustified without being viewed as having committed an act that reflects negatively on him, Mosk opined that the allegedly offending statements about Regalia did not directly injure Regalia as an automotive professional or his new business, Regalia Concours Restoration.
Similarly, Mosk noted that a stated unwillingness of employees to work with a person, without more, would not necessarily reflect poorly on that person because the desire to not work together could be based on differences in work ethic or legitimate business policies as opposed to some professional fault attributable to the individual.
Although the alleged statements about Regalia did not directly disparage him, Mosk acknowledged, they could have actually damaged Regalia’s professional reputation and for that reason should have been presented to the jury under a slander per quod theory, with Regalia bearing the burden of proving that harm.
But because the jury found Regalia had not suffered actual damages after he had a full and fair opportunity to litigate that issue, he concluded, remand for retrial was unnecessary, and the justice—joined by Justices Orville A. Armstrong and Sandy R. Kriegler—directed the trial court to enter judgment in favor of Nethercutt and the museum.
Robert C. Baker and Laurence C. Osborn of Baker, Keener & Nahra represented Nethercutt and the museum. Los Angeles attorney Marvin E. Krakow represented Regalia.
The case is The Nethercutt Collection v. Regalia, 09 S.O.S. 1754.
Copyright 2009, Metropolitan News Company