What to say – and not to say – about an employee’s termination

My last column[1] addressed challenges an employer faces in establishing that a former employee violated a nondisclosure agreement by making anonymous general comments about the employer’s plans on social media. This column focuses on a recent case that demonstrates challenges an individual faces in suing his former employer over a post-termination announcement.

Dov Charney, the founder and then-CEO of American Apparel, was dismissed by the company’s board following an investigation into aspects of Charney’s conduct. Investment firm Standard General issued a press release supporting what the firm called the “independent, third-party and very thorough investigation into the allegations against Mr. Charney” and expressing “respect” for the board’s decision to dismiss Charney “based on the results of that investigation.”

Charney sued Standard General asserting several claims, all of which depended on the press release being defamatory. Defamation is the utterance or publication to others of a false, unprivileged statement of fact about a person that has a tendency to harm the person’s reputation. Charney asserted that the press release falsely stated that the investigation had been “independent” and had suggested that Charney had committed specific kinds of misconduct.

The trial court and then the court of appeal dismissed Charney’s lawsuit, finding that there was not even “a minimal chance” his claims ultimately would succeed. The court of appeal concluded that the statement in the release about the independent nature of the investigation could not be defamatory because the statement was not about Charney, but about the investigation. Anyway, it was a statement of opinion, not fact.

The court rejected Charney’s allegation that the press release falsely suggested he had engaged in specific kinds of misconduct. The release said nothing specific about why Charney was terminated, though it did say that certain “allegations” were made about him, investigated, and that he was thereafter terminated. The court of appeal added that, even if the press release could be interpreted as saying Charney was fired for unidentified misconduct, a dispute over whether “improper” conduct justified his termination was a matter of opinion, not a matter of provably false fact.

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