Liability May Be Predicated on ‘Self-Defamation’

Wednesday, April 22, 2020

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Liability May Be Predicated on ‘Self-Defamation’—C.A.

Fourth District’s Div. One Becomes First Appellate Court in State to Affirm Judgment Under Such a Cause of Action; Panel in 1980 Reversed Dismissal of Suit Founded on That Theory

By a MetNews Staff Writer

Div. One of the Fourth District Court of Appeal yesterday became the first appellate tribunal in California to affirm a judgment based on a plaintiff’s self-defamation, holding that a life insurance salesman was justly awarded $1.7 million based on his need to recite to prospective employers the false allegations his previous employer had made in firing him.

Justice Richard D. Huffman wrote the opinion which upholds the defamation judgment which Michael A. Tilkey obtained against Allstate Insurance Company, which had employed him for 30 years, ending May 27, 2015. The opinion says a jury properly determined that he is entitled to punitive damages but that an award of nearly $16 million was excessive, and must be redetermined on remand.

Awards of $2.7 million in compensatory damages and $960,222 for wrongful termination were invalidated. The total amount awarded by a San Diego Superior Court jury was $18,641,959.

One Other Case

Pointing to the First District Court of Appeal’s 1980 decision in McKinney v. County of Santa Clara, Huffman said:

“Allstate argues only one published case has permitted a compelled self-publication claim to survive summary judgment, and that case, McKinney, relied on out-of-state cases with unique facts, implying it should not supply a basis for our conclusion. However, the facts of the cases discussed in McKinney are not so different from the one before us now.”

Huffman noted the Georgia and Michigan cases cited in McKinney; he did not discuss the facts in McKinney. There, the employment of a probationary deputy sheriff was terminated, with the reasons given for the action allegedly being based on falsehoods.

His disclosure of the false statements to police departments from which he sought to secure employment was not voluntary, he insisted, but out of necessity. The First District agreed, holding that the cause of action for libel and slander should not have been dismissed, and that the plaintiff should be allowed to amend his pleading to assert that his republication of the allegations was foreseeable.

The court in McKinney held:

“Though California has never addressed this question, it has been addressed by several other jurisdictions. Those jurisdictions which have considered it have developed a well recognized exception to the general rule respondents refer to. They have held the originator of the defamatory statement liable for damages caused by the disclosure of the contents of the defamatory statement by the person defamed where such disclosure is the natural and probable consequence of the originator’s actions.

Tilkey’s Case

The allegations against Tilkey were set forth in a form filed with the Financial Industry Regulatory Authority (“FINRA”). The form, which is accessible to firms that employ licensed insurance broker-dealers such as Tilkey, says:

“Termination of employment by parent property and casualty insurance company after allegations of engaging in behaviors that are in violation of company policy, specifically, engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate. Not securities related.”

Huffman recited that Tilkey stayed with his girlfriend while in Arizona; on Aug. 16, 2014, they argued and he decided to leave the home; he went on the patio to fetch a possession and was locked out; he banged on the door, damaging it; the girlfriend summoned police; Tilkey was arrested. He pled guilty to disorderly conduct and, after completing a domestic nonviolence diversion program, the charge was dismissed.

Contrary to what was entered on the FINRA form, Huffman noted, Tilkey did not engage in threatening or violent conduct.

Self-Publication

Rather than suing Allstate based on what it said on the form, Tilkey sued based on his disclosures of the falsehood to prospective employers.

He alleged in his complaint, filed May 10, 2016:

“Defendant Allstate has compelled Plaintiff to self-publish defamatory statements about himself to prospective employers and others in his industry because Allstate stated that the reason for his firing was making a threat against another person. Allstate knew Plaintiff would be compelled to restate and publish the defamatory statement when seeking subsequent employment after three decades working with Allstate.”

The cause of action was valid, Huffman said, explaining that because the FINRA form “was available to every prospective employer of similarly-licensed employees,” it follows that “Tilkey was compelled to explain the reason for his discharge, and this repetition was reasonably foreseeable.”

He stressed that for a cause of action to exist for self-defamation, there must be a “strong compulsion” for republishing defamatory statements and “the foreseeability of the repetition.”

Those elements were found absent in published decisions dealing with the theory of liability, such as the 1991 opinion in Live Oak Publishing Co. v. Cohagan from the Third District. The court found no liability to a newspaper which published a letter-to-the-editor criticizing it, then sued the writer of the letter, contending it was obliged to print it—a contention that was rejected.

Punitive Damages

Explaining why the $15,978,822 punitive-damage award must be lowered, Huffman said it is disproportionate to the total amount awarded by the jury in in compensatory damages—$2,663,137—and all the more out of line in light of the judgment being affirmed only as to the $1,702,915 award based on self-defamation.

The jurist declared:

“Even without excluding the damages awarded for wrongful discharge, this ratio strikes us as excessive given the level of reprehensibility here. Without the compensatory damages awarded for wrongful discharge, the ratio is greater than nine to one, a ratio we conclude is constitutionally excessive….Additionally, because the jury’s punitive damages award is not allocated to the various liabilities it found, it is not possible to know how much punishment the jury felt was necessary for the company’s defamatory action, which must serve as the basis for the damages in this case. Accordingly, we will remand the matter for reconsideration of the appropriate amount of punitive damages based on defamation.”

Labor Code §432.7

The damages disallowed by the Court of Appeal were based on a supposed violation of Labor Code §432.7 which bars an employer from making an employment decision based even in part on “any record of arrest...that did not result in a conviction.” Huffman said that the section “does define conviction to include a plea, regardless of whether the court ultimately imposes a sentence,” and Tilkey did enter a guilty plea.

The case is Tilkey vs. Allstate Insurance Company, 2020 S.O.S. 1838.

Representing Allstate on appeal were Janice P. Brown and Arlene R. Yang of Brown Law Group; Rex S. Heinke and Jessica M. Weisel of Akin Gump Strauss Hauer & Feld; and Anneliese Wermuth and Jenny R. Goltz of Cozen & O’Connor. Attorneys for Tilkey were Louis “Chip” Edleson and Joann F. Rezzo of Edleson & Rezzo, along with Williams Iagmin and Jon R. Williams.