Appeals Court Clarifies When Employees Can Sue Bosses for Libel

RALEIGH — The state’s second highest court recently decided the conditions under which someone can sue an employer for libel. The dispute involved an adverse performance review of an N.C. State University professor. The court’s decision upholds the right to sue when an employee has been defamed by internal company documents that are shared with others.

Mark White was a tenured associate professor in the Department of Electrical and Computer Engineering at N.C. State. Robert Trew was the department chair and wrote White’s annual review. Trew concluded that White had not met the expectations of the department. Trew passed his assessment along to N.C. State’s dean of engineering and in-house counsel. It also went into White’s personnel file.

White objected to Trew’s characterization of his performance and wrote a “rebuttal letter,” which Trew found unpersuasive. White then filed a grievance, seeking to have the review stricken from his personnel file. He also sued Trey for libeling him.

Trew argued that the libel suit should be thrown out. Superior Court Judge W. Osmond Smith III did not agree, and denied Trew’s motion to dismiss. Trew then brought the matter to the Court of Appeals, claiming that Smith had reached the wrong legal conclusion.

Before the appeals court, Trew advanced three arguments why White’s claim should not proceed to trial: the claim was barred by sovereign immunity; White had not exhausted his administrative remedies; and White could not win, as Trew did not “publish” the performance review. The appeals court rejected all three claims.

Trew argued that because the suit challenged actions he made in his official capacity as department head, the doctrine of sovereign immunity should bar White’s claim.

The appeals court did not agree. Sovereign immunity, Judge Rick Elmore noted, bars claims only when government officials are acting in their official capacity without “malice or corruption.”

“Even if the writing of a review is an activity defendant could have only carried out in his official capacity, because plaintiff alleges that defendant carried out this activity maliciously, defendant is not protected by sovereign immunity,” Elmore wrote.

Trew next argued that White could not pursue court action because he had not exhausted all of his administrative remedies. The appeals court noted that this doctrine applies only if an effective administrative remedy exists, which was not true in this case. Had White’s grievance succeeded, the negative review would have been destroyed. That is different from the financial compensation White sought for allegedly having his professional reputation defamed.

Trew’s final argument was that the case should be dismissed because without publication, no libel had occurred. The N.C. Supreme Court held in the 1979 case Arnold v. Sharpe that “there is no basis for an action for libel unless there is a publication of the defamatory matter to a person or persons other than the defamed person.”

Specifically, Trew argued that in an employment context, agents and employees of a single employer did not count as the third person necessary for libel to have occurred. He cited Satterfield v. McLellan Stores, a 1939 case in which the N.C. Supreme Court found that libel did not exist when a manager gave a note to a stenographer to type a separation notice based upon alleged misconduct.

The high court held that “the stenographer [was] not a third person within the contemplation of law with respect to publication of a libelous matter.”

The Court of Appeals, however, refused to interpret Satterfield as Trew wished.

Trew produced the annual review on his own. The dean and in-counsel were involved only after the review was finished. The appeals court also noted that the N.C. Supreme Court had based its holding in Satterfield on a New York case with a virtually identical fact pattern, Owen v. Ogilvie Publishing Co. In it, the New York court noted that a statement could be considered published for purposes of libel if it is seen by a third party who is “distinct and independent of the process by which the libel was produced.”

In this instance, however, wrote Elmore, “giving the review to the dean and the staff of the office of general counsel constitutes publication for the purposes of libel.”

The case is White v Trew, (11-337).

Michael Lowrey is an associate editor of Carolina Journal.

Editor’s note: This story was corrected after initial publication.