Plaintiffs Lawyers Take a Liking to Employee Defamation Claims

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Posted by Legal Team On August 15, 2022

A former PayPal Inc. executive kicked off a Twitter rant against the company last May with a picture of himself giving the camera the middle finger.

A few hours later, Rakesh “Rocky” Agrawal reportedly called PayPal’s global brand and communications officer a “piece of shit” and a “useless middle manager.” Some of the tweets, sent after 1 a.m. from Jazz Fest in New Orleans, were so full of typos that they were incoherent.

It’s no surprise the episode sparked a defamation suit. But in a man-bites-dog twist, Agrawal is the one suing PayPal.

His May 1 complaint takes issue with a tweet sent by PayPal in response to his tirade: “Rakesh Agrawal is no longer with the company. Treat everyone with respect. No excuses. PayPal has zero tolerance.” Agrawal says he resigned and PayPal’s post wrongly implied he was fired.

The case is an extreme example, but defamation suits by workers against employers are on the rise, according to employment lawyers. The claims often crop up in wrongful-termination and discrimination suits, where plaintiffs say their bosses gave false reasons for firing them. While adding a defamation claim generally won’t increase the value of an employment lawsuit, it opens one more avenue to recovery.

David Lowe of Rudy, Exelrod, Zieff & Lowe, who recently won a $4 million judgment in a wrongful termination and defamation trial, said employment and defamation claims make a good pairing.

“Lawyers are becoming more savvy about recognizing that there could be defamation claims that previously had been overlooked,” he said.

Lawyers who represent employers complain plaintiffs counsel are stretching defamation law too far, and tacking on claims where they aren’t supported. Reed Smith partner L. Julius Turman says 60 to 70 percent of his wrongful termination and harassment cases include a defamation claim, “whether or not they’re appropriate.”

The claims are more of an annoyance than a serious problem, he said. The court often throws out the claims quickly, he added, but not before they’ve cost his client time and defense costs.

A defamation claim made a big difference last year in a Sacramento Superior Court trial against Kemper Independence Insurance Co. Robert Sallustio accused the company of firing him after he repeatedly complained about the company’s treatment of another employee, his ex-wife, who suffered from a stress-related disability. In response to his complaints, Sallustio said an executive trumped up a false excuse to fire him-wrongly reporting he wasn’t coming to work in the mornings. Five days before trial, the court knocked out Sallustio’s retaliation and wrongful-termination claims in summary adjudication. All attorney Christopher Whelan had left was a defamation claim, but that was enough to secure a nearly $5.7 million judgment.

Whelan, described as a guru in the field, has specialized in employment defamation claims for 30 years. “I look for that in cases,” he said.Increasingly, other plaintiffs lawyers are following his lead.

“The cause of action always existed,” said Kelly Armstrong of the Armstrong Law Firm, “but I would say within the employment community there is definitely more of a focus on it right now.”

Defamation claims are increasing across the board, not just in the employment context, fueled by online posts and social media.

San Francisco Internet law attorney Karl Kronenberger said his defamation practice has exploded as a result of comments on blogs, social media and consumer review sites like Yelp and Ripoff Report. The number of defamation claims his firm fields has doubled over the past 18 months. “I’m shocked at how many people are contacting our firm,” Kronenberger said.

Of course, not every defamation claim is a winner, Whelan pointed out, using the PayPal case as an example. Whelan said Agrawal could struggle proving his case because PayPal’s tweet didn’t say he was fired-it said he’s no longer with PayPal, which was true. There’s not much difference between resigning under pressure and being fired anyway, he added.

“In that type of situation, the defense of truth would probably be pretty effective,” Whelan said.

Proving up a defamation claim is “not an easy road for plaintiffs,” Whelan said. An employer can quickly deflate a plaintiff’s defamation claim by showing the alleged defamatory statement was true. The employer also can argue a statement is privileged workplace communication-internal discussions about an employee’s performance generally are protected.

In Lowe’s recent $4 million case, he claimed St. Patrick-St. Vincent High School in Vallejo made false claims about his client to the local TV news station, among others. Lowe’s client, Christopher Cerbone, said he was fired from his position as gym teacher and varsity football coach after reporting sexual misconduct by students in the locker room. Several boys told him the junior-varsity coach allowed older players to stick their naked buttocks in the freshmen’s faces, or slap the freshmen with their penises, according to Cerbone’s complaint. The school responded to Cerbone’s report by firing him for failing to supervise the football players, prompting Cerbone to sue for defamation, wrongful termination and retaliation.

A jury in Sacramento Superior Court came down in Cerbone’s favor in March.

“Defamation claims can come up in a lot of different contexts,” Lowe said. “And they can lead to very big awards.”

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