Post-discharge defamation – be careful

Atlantic Health System fired Jason Shann, who had been a team leader in the IT department. The HR folks told Shann that the basis of his termination was (i) the unauthorized removal of equipment; (ii) the unauthorized removal of two proprietary hard drives from his workstation; (iii) the overwriting of over 27,000 files on the one remaining hard drive at his workstation; and (iv) the use of an unauthorized third-party software on Atlantic Health's computer equipment.

After that, the employer sent an email to two individuals at a computer vendor company saying it had "launched an internal investigation to determine if Atlantic Health employee Jason Shann has been operating a side business performing computer support while on Atlantic Health time clock." The email also said there was "reason to believe that [Shann] has downloaded the Microsoft Product keys and may be using them in a way not consistent with the licensing agreement."

Can you see a defamation suit coming? Sure. Here it is: Shann v. Atlantic Health Systems (US District Court, District of New Jersey 1/13/2017).

Shann sued the company, alleging disability discrimination, an FMLA violation, and so on. One of the claims was defamation.

Today, let's focus only on the defamation claim. The court said very little. The legal issue was whether the court could grant summary judgment in favor of the employer. The court said it could not because there remained a genuine issue of material fact (which needs to be decided after an actual trial).

As a legal matter, this is not a remarkable case. The practical implications, however, are enormous. An employer may have an air-tight case for being able to fire an employee, but emails and other statements made to third parties can be defamatory. Let me quote Jon Hyman at Ohio Employer's Law Blog:

"Employers must tread very carefully when communicating personnel decisions, or the facts underlying them, to third parties. The employer really did not have a compelling need to disclose its beliefs about Shann’s wrongdoing. And I’m not sure it disclosed anything untruthful (at least as the facts are presented in the case). But the court was not necessarily convinced and held that issue over for trial."