Stringer v. Wal-Mart Stores, Inc.
151 S.W.3d 781, 2004 Ky. LEXIS 245, 21 I.E.R. Cas. (BNA) 1682 (2004)
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Rule of Law:
An employer's qualified privilege for internal communications can be defeated if a statement about a terminated employee is made with malice, which can be inferred from the statement's falsity. A false accusation of theft constitutes defamation per se, and a statement that reasonably implies more serious misconduct than what occurred can be sufficient to create a jury question on the issue of defamation.
Facts:
- Appellants were employees at a Wal-Mart store managed by Appellee Anthony Whitaker.
- The store had a policy against employees taking company property, including 'claims candy'—candy from damaged packages slated for disposal.
- Whitaker directed the installation of a hidden video camera with audio capabilities in the store's 'claims area' without the employees' knowledge.
- The camera recorded the Appellants eating claims candy.
- In June and July 1995, Wal-Mart terminated the Appellants, citing 'unauthorized removal of company property' and 'violation of company policy' on their termination documents.
- Following the terminations, Whitaker held a store-wide meeting and stated that some associates had been fired for 'stealing.'
- A Wal-Mart Assistant Manager, James Carey, responded to an employee's question about the terminations by stating, 'There was more to it than that' and that he could not talk about it.
- Whitaker forwarded the termination documents, which listed 'unauthorized removal of company property' as the reason for termination, to the state unemployment office to contest the Appellants' unemployment claims.
Procedural Posture:
- The terminated employees (Appellants) filed a lawsuit against Wal-Mart and their supervisor, Anthony Whitaker (Appellees), in the Wayne Circuit Court (trial court).
- The complaint alleged intentional infliction of emotional distress, defamation, and invasion of privacy.
- A jury found in favor of the Appellants on all claims and the trial court entered a judgment awarding each Appellant $5,000,000 in damages.
- Appellees appealed to the Kentucky Court of Appeals (intermediate appellate court).
- The Court of Appeals reversed the trial court's judgment in its entirety, ruling that a directed verdict should have been granted in favor of the Appellees on all claims.
- The Supreme Court of Kentucky granted discretionary review to the Appellants.
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Issue:
Does an employer's statement implying that former employees were terminated for more serious misconduct than what was publicly known create a jury question for defamation, even when the employer has a qualified privilege for internal communications?
Opinions:
Majority - Justice Keller
Yes. An employer's statement implying that former employees were fired for more serious misconduct than what was publicly known creates a jury question for defamation, overcoming a qualified privilege. The court found that the Appellants' claims for Intentional Infliction of Emotional Distress (IIED) and invasion of privacy failed. The conduct surrounding the termination did not meet the high 'outrageous' standard required for IIED. The invasion of privacy claim failed because the Appellants did not prove any specific damages resulting from the audio surveillance itself. However, the defamation claim was valid. A false accusation of theft is defamation per se, meaning injury is presumed. The assistant manager's statement that 'there was more to it than that' could reasonably be interpreted by a jury as an assertion that the Appellants had stolen items of greater value than candy. Because this implication had no factual basis, the defense of truth fails. While employers have a qualified privilege for internal communications regarding employee conduct, this privilege is lost if abused or exercised with malice. The falsity of the statement itself is evidence from which a jury could infer malice, thus creating a triable issue of fact and making a directed verdict improper.
Dissenting - Justice Graves
No. The employer's statements were not reasonably defamatory and were protected by the defense of truth. The statement that 'there was more to it than that' is a vague comment that would not imply wrongdoing to a reasonable listener; it is a common way to deflect conversation. Furthermore, the core accusation of theft was substantially true. The employees admitted to taking company property without authorization or payment, which constitutes theft under its general definition and was a clear violation of company policy. Because truth is a complete defense to defamation, and the employer's statements were true in their essential parts, the defamation claim should fail as a matter of law.
Analysis:
This decision clarifies the limits of an employer's qualified privilege in defamation cases within Kentucky's employment law. It establishes that even indirect or vague statements can be actionable if they carry a defamatory implication that is false, thereby creating a jury question on whether the privilege was abused through malice. The ruling reinforces that while employers have latitude in discussing disciplinary actions internally, this protection is not absolute and does not shield them from liability for spreading false information that harms an employee's reputation. The case also affirms the very high threshold for proving intentional infliction of emotional distress in the employment termination context, distinguishing between unpleasant workplace events and legally 'outrageous' conduct.
