Employees may believe they can premise a defamation case on their employment termination. However, Hearn v. Pac. Gas & Elec. Co., 108 Cal. App. 5th 301 (2025), holds otherwise.

Background

On Jan. 24, 2025, California’s First District Court of Appeal reversed a $2.1 million jury verdict against PG&E for a defamation claim brought by a former employee. In doing so, the court clarified the applicable legal standard for the recovery of tort remedies in the employment context. The court held that employees cannot bring tort claims against employers premised upon the same conduct giving rise to a termination where the damages are solely related to the loss of employment.

The plaintiff in this case was a former lineman at a PG&E facility in Napa, California. The plaintiff was investigated for misuse of company time and falsified timecards, and he was terminated thereafter. He disputed the investigation findings and claimed he was targeted in retaliation for safety concerns he previously reported to management. The employee brought claims against PG&E for retaliation, wrongful termination, and defamation. The defamation claim concerned the alleged false accusations forming the basis of his termination. At trial, the jury rejected his retaliation claim but ruled in his favor on the defamation claim, awarding $2.1 million in damages. PG&E appealed on the grounds that the defamation claim was precluded because it was based on the same conduct giving rise to his termination.

The court agreed with PG&E and reversed the $2.1 million jury verdict on the defamation claim. Reviewing California Supreme Court precedent on the issue of tort liability in the employment context, the court held that tort claims related to employment terminations are only actionable where (1) the tort is based on conduct other than that giving rise to the employment termination; and (2) the damages sought do not exclusively result from the termination itself.

The court found that neither requirement was met here. First, the defamation claim concerned allegedly false accusations and statements made in an investigation report that formed the basis of the plaintiff’s termination. The court stated that the alleged harm was indistinguishable from an ordinary wrongful termination claim. Second, the plaintiff did not seek any damages separate from his loss of employment, such as distinct reputational damages or damages arising from republication to third parties. Accordingly, the plaintiff could not recover on his claim for defamation.

Takeaway

Hearn serves as another reminder that when an employee’s defamation claim is a recast of his or her wrongful termination claim, an employer may avoid liability when the alleged defamation arises “from the same conduct giving rise to his termination and the only result is the loss of his [or her] employment.” While a positive decision for California employers, we note that this case may be teed up for review by the California Supreme Court in light of a strong dissenting opinion from Presiding Justice Alison M. Tucher.