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In-House Counsel Not Liable For Defamation

Published by on November 21, 2007

Can in-house counsel be held liable for defamation by sending a termination letter to an employee’s attorney recounting the grounds for the termination?  The U.S. Court of Appeals for the Eighth Circuit said “no” under North Dakota law in Humann v. KEM Elec. Coop., Inc., No. 06-3408 (8th Cir. 2007).  Humann retained a lawyer after […]

Can in-house counsel be held liable for defamation by sending a termination letter to an employee’s attorney recounting the grounds for the termination?  The U.S. Court of Appeals for the Eighth Circuit said “no” under North Dakota law in Humann v. KEM Elec. Coop., Inc., No. 06-3408 (8th Cir. 2007).  Humann retained a lawyer after being placed on administrative leave from her position.  During the leave, in-house counsel contacted Humann to discuss a severance package.  Humann retained a lawyer, who sent a demand letter.  “Rather than making any further offer, [in-house counsel] sent [her lawyer] a letter . . . stating that Humann’s employment at KEM was terminated and giving a number of reasons, such as insubordination and failure to perform her job satisfactorily.”  Humann sued her former employer and included a defamation claim against the in-house attorney for defamation.

The district court dismissed the defamation claim on summary judgment and the court of appeals affirmed.  Citing North Dakota law, which makes communications regarding proposed or threatened judicial proceedings privileged from defamation claims, the court found that the in-house attorney’s letter was privileged because it was in response to a letter referring to things such as a “prima facie case,” “remedies,” and “actions against KEM.”

Although escaping a defamation claim based on a privilege is certainly the preferred route, this decision is a reminder to all who document employee terminations that the documentation must be truthful.

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