Biber v. Duplicator Sales & Service, Inc.
155 S.W.3d 732, 2004 WL 2756226, 2004 Ky. App. LEXIS 346 (2004)
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Rule of Law:
A contract's 'without cause' termination clause may be invoked for any reason, including for cause, provided its terms are followed. While intra-corporate communications constitute 'publication' for a defamation claim under Kentucky law, statements of opinion based on disclosed, truthful facts are absolutely privileged and not actionable.
Facts:
- In December 2001, Information Technologies Consulting, Inc., owned by William Biber, contracted to provide computer consulting services to Duplicator Sales & Service Inc. for one year at a cost of $70,000.
- The contract included a clause allowing Duplicator Sales to terminate the agreement 'without cause' by providing 30-day written notice and a corresponding payment.
- In January 2002, Duplicator Sales discovered that Biber was creating purchase orders for an inflated price to a company owned by his wife, while actually acquiring the equipment from another company at a lower price and keeping the profit.
- Duplicator Sales' president, Jerry Nash, and its HR manager, Debra deDoming, made statements to other employees about Biber's conduct.
- Nash allegedly stated Biber's actions were 'throwing up red flags,' appeared unethical, and that he 'felt like he had been conned by the world’s greatest con man.'
- On January 15, 2002, Duplicator Sales terminated the agreement by giving Biber a 30-day written notice and paying him $5,753.42, consistent with the 'without cause' provision.
Procedural Posture:
- William Biber commenced an action against Duplicator Sales, Jerry Nash, and Debra deDoming in Kentucky circuit court (trial court) for breach of contract and slander.
- The defendants moved for summary judgment on both claims.
- The circuit court granted summary judgment for the defendants, dismissing both the contract and defamation claims as a matter of law.
- Biber, as the appellant, appealed the circuit court's grant of summary judgment to the Kentucky Court of Appeals.
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Issue:
Does a 'without cause' termination clause permit a party to terminate a contract for cause by following the clause's specific notice and payment provisions, and are allegedly defamatory statements made between corporate employees actionable when they are opinions based on truthful, admitted facts?
Opinions:
Majority - Emberton, Senior Judge
No, the termination did not breach the contract, and no, the statements are not actionable defamation. A 'without cause' termination provision in a contract is not nullified simply because the terminating party has a specific reason or 'cause' for the termination; the plain meaning of 'without cause' includes any reason, so long as the stipulated notice and payment requirements are met. Regarding defamation, this court, as a matter of first impression, expressly rejects the intra-corporate immunity rule and holds that communications between a corporation's employees can constitute 'publication.' However, the statements in this case are not actionable because they were expressions of opinion based on truthful, admitted facts. Biber admitted to the dishonest purchasing practices, and Nash's comments that this conduct appeared unethical or that Biber was a 'con man' were opinions based on those disclosed truths, which are absolutely privileged.
Analysis:
This case establishes significant precedent in Kentucky defamation law by explicitly rejecting the intra-corporate immunity doctrine, thereby expanding potential liability for employers by recognizing internal communications as 'publication.' This aligns Kentucky with the modern trend and the Restatement of Torts. However, the decision simultaneously reinforces the robust defense that opinions based on disclosed, truthful facts are absolutely privileged, providing a clear safe harbor for employers discussing employee misconduct. The contract portion of the ruling confirms that parties can rely on the flexibility of a 'without cause' termination clause even when a clear 'for cause' reason exists.
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