2.3 Defamation

• Library: Virginia Business Torts (Virginia CLE) (2019 Ed.)

2.3 DEFAMATION ¹⁰²

2.301 Introduction. Defamation claims arise frequently in an employee-employer context but are also seen in other business settings. The allegations may accompany other claims in competitors' disputes or when contractual relations turn sour.

Defamation claims may arise when a relationship between businesses deteriorates or between competitors trying to influence the market. Corporations may also become defamation plaintiffs when statements made impugn corporate honesty, solvency, or quality of goods and services. ¹⁰³ A corporation

[Page 29]

"may be defamed per se by statements 'which cast aspersion on its honesty, credit, efficiency or its prestige or standing in its field of business.'" ¹⁰⁴

The most likely times for an employer to face a defamation claim are: (i) when disciplining an employee or criticizing an employee's work performance; (ii) when terminating an employee for cause; and (iii) when giving employment references regarding former employees. In all three of these situations, a qualified privilege from liability for defamation may exist. ¹⁰⁵

2.302 General Principles.

A. In General. Unlike most jurisdictions, Virginia recognizes no distinction between libel and slander; there is a single cause of action for "defamation," however published. ¹⁰⁶

B. Elements.

1. In General. In Virginia, the elements of defamation are (i) an actionable statement (ii) published with (iii) requisite intent. ¹⁰⁷ However, the facts and circumstances of each claim dictate how these elements should be pleaded and proved. ¹⁰⁸

There are three separate standards for defamatory actions. To show defamation per se, a plaintiff must prove by a greater weight of the evidence that the statement was (i) made by the defendant; (ii) about the plaintiff; (iii) heard by someone other than the plaintiff; (iv) false; and (v) made by the defendant knowing it to be false or, believing it to be true, lacking

[Page 30]

reasonable grounds for that belief or acting negligently in failing to ascertain the facts on which the statement was based. ¹⁰⁹

If a statement is not defamatory per se but the court determines that it substantially endangers the plaintiff's reputation, the plaintiff must prove all of the above five elements and additionally prove that (vi) the plaintiff sustained actual damage as a result of the statement. ¹¹⁰

Finally, if the court determines that the statements are not defamatory per se and do not make substantial danger to the plaintiff's reputation apparent, the plaintiff must prove all of the above six elements and additionally prove that (vii) the words in the statement, in their normal usage, are understood by the people in the community to harm the plaintiff's reputation. ¹¹¹ Further, in this last instance, instead of proving the fifth element stated above, a plaintiff must prove by clear and convincing evidence that the defendant either knew the statement to be false or made it so recklessly as to amount to a willful disregard for the truth, namely, with a high degree of awareness that the statement was probably false. ¹¹²

2. Actionable Statement.

a. Pure Opinion Not Actionable. Speech that does not contain a provably false factual connotation or that cannot be reasonably interpreted to contain actual facts about a person cannot form the basis of a defamation claim. ¹¹³ Accordingly, "rhetorical hyperbole is not defamatory." ¹¹⁴ "Statements characterized as rhetorical hyperbole are those from which 'no

[Page 31]

reasonable inference could be drawn that the individual identified in the statements, as a matter of fact, engaged in the conduct described.'" ¹¹⁵

Moreover, under Virginia law, a "[p]ure expression . . . of opinion" is not actionable as defamation. ¹¹⁶ But as the Virginia Supreme Court has explained, "expressions of 'opinion' may often imply an assertion of objective fact" and "[s]imply couching . . . statements in terms of opinion does not dispel these implications." ¹¹⁷

Whether a statement is an assertion of fact or a mere opinion is a question of law to be decided by the court rather than by the jury. ¹¹⁸ "In determining whether a statement is one of fact or opinion, a court may not isolate one portion of the statement at issue from another portion of the statement." ¹¹⁹ "Rather, the alleged defamatory statement must be considered as a whole to determine whether it states a fact or non-actionable opinion." ¹²⁰

[Page 32]

The Virginia Supreme Court has considered the distinction between opinion and fact in recent decisions. In Government Micro Resources, Inc. v. Jackson, ¹²¹ a former CEO sued his previous employer for defamation because the employer had called prospective employers and told them he had "mismanaged" the company and lost an "exorbitant" amount of money for the company. ¹²² The court held that "whether a company's financial loss is the result of mismanagement is a fact that can be proven," despite the use of "the terms 'exorbitant' and 'mismanaged' contained in the allegedly defamatory statements." ¹²³

In Tronfeld v. Nationwide Mutual Insurance Co., ¹²⁴ the Virginia Supreme Court distinguished between statements that contained words that are relative in nature or depend on the speaker's viewpoint, such as "inexperienced" or "reasonable," and found that a statement that the plaintiff lawyer "just takes people's money" and a statement that people would receive more money if they worked directly with the insurance adjuster were statements of fact because the statements could be disproved by evidence that the lawyer's clients received monetary or other relief as a result of his legal services or that such relief exceeded offers made by insurance com-panies. ¹²⁵

Third, in Raytheon Technical Services Co. v. Hyland, ¹²⁶ the Virginia Supreme Court considered whether statements made in a performance evaluation were opinion or factual statements capable of being defamatory. In Hyland, a former vice president sued her previous employer for

[Page 33]

defamation because her immediate supervisor wrote a negative performance review containing five allegedly defamatory statements. ¹²⁷ Significantly, the negative performance evaluation was written after Hyland's supervisor learned of her honest and confidential critique of him in response to the company's inquiry through a third party. ¹²⁸ Finding that five statements in the performance evaluation were in fact false and defamatory, the jury awarded Ms. Hyland $3.5 million. ¹²⁹

On appeal, the Virginia Supreme Court held that a performance evaluation can be the basis of a defamation claim but found that three of the five statements submitted to the jury were opinion, not fact, and since the statements were not separated out for specific findings, there was no assurance that those opinion statements did not form the basis for the verdict. ¹³⁰ The court reversed and remanded for a new trial on the two remaining statements. ¹³¹

In allowing the first statement to remain, the court found that "whether the business unit missed its goals by the stated percentages is a fact" despite the use of the word "significantly" to describe the failure to meet the financial goals at issue. ¹³² In allowing the second statement to remain, the court analyzed it as follows:

The negative import of this statement is that Hyland was responsible for certain losses that

[Page 34]

adversely affected the company. Whether Hyland led the protest of the TSSC contract award and the TSA procurement and was responsible for "[t]hese visible losses" is susceptible to empirical proof. Similarly, whether losses from those projects created gaps in the company's plans and the financial performance of business units which she oversaw can be established through the production of evidence. The adjective "significant" may be a matter of opinion, but the operative part of the statement involves Hyland's responsibility for the losses, not their size. Therefore, the trial court did not err in holding that this statement was not a statement of opinion and could be the basis for a claim of defamation. ¹³³

In contrast, the court found that the third statement, that the plaintiff "is frequently verbose and vocal in her opinions, to a degree that others stop participating in open dialogue," could not support a claim for def-amation. ¹³⁴ Even though the fact that others stopped participating in open dialogue was capable of being proven true or false, the court found that the defamatory aspects of the statement, namely, the frequency of the plaintiff's conduct and the reason for others not participating in open dialogue, were opinions based on the speaker's perspective and could not provide the basis for a claim of defamation. ¹³⁵ The court also determined that the fourth and fifth statements—that the plaintiff "appeared to be unwilling" to accept feedback and that she was "inappropriately and openly critical"—were also not actionable statements because they were matters of the speaker's perspec-tive. ¹³⁶

Fourth, in Schaecher v. Bouffault, ¹³⁷ the Virginia Supreme Court emphasized the context and audience of the alleged defamatory statement when it found the lower court did not err in sustaining a demurrer on

[Page 35]

the plaintiffs' claim of defamation. ¹³⁸ The case involved an LLC and its owner who applied for a special use permit and allegedly defamatory statements made to the local planning commission by a neighbor. ¹³⁹ After finding that many of the statements did not have the required level of "sting" to be defamatory, the court found that an email charging that the individual plaintiff was "lying and manipulating facts," did have the necessary defamatory "sting" in the context of the entire email. "[T]he perception that one is deliberately lying and manipulating facts throughout a governmental process is sufficiently damaging to one's reputation so as to deter others from associating with her and render her contemptible in the estimation of the community." ¹⁴⁰

However...