Reference no: EM131451096

Question: Jensen v. Hewlett-Packard Co. 18 Cal. Rptr. 2d 83 (Cal. Ct. App. 1993)

An employee who did not agree with his performance evaluation filed suit against the employer for defamation. The court found that, "unless an employer's performance evaluation falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence or reprehensible personal characteristics or behavior, it cannot support a cause of action." Because the current case did not contain evidence in support of that standard, no cause of action was stated.

Sonenshine, J.

Sean Jensen seeks reversal of a judgment in his defamation action against his former employer, HewlettPackard Company, and one of its supervisors, Rod Smith. The lawsuit involves a difference of opinion between the employer and employee about the quality of the employee's work. A supervisor, Hank Phelps, evaluated the employee, Jensen, as needing to improve his on-the-job performance in certain respects. Jensen took offense at the evaluation, claimed it was false, and accused Phelps of trying to hide his own incompetence. He demanded the evaluation be removed from his personnel file and challenged Phelps "to prove his various allegations to an impartial factfinder." Hewlett-Packard investigated the matter and sided with Phelps.

As a prelude to our holding, we express our strong judicial disfavor for libel suits based on communications in employment performance reviews, particularly when, as here, the tort claim appears to be an attempted end run around the law. In light of the multitude of laws designed to protect the employee from oppressive employment practices, evaluations serve the important business purpose of documenting the employer's hiring, promotion, discipline and firing practices. Moreover, the laudable practice of evaluating employees is to be encouraged for other important reasons. The performance review is a vehicle for informing the employee of what management expects, how the employee measures up, and what he or she needs to do to obtain wage increases, promotions or other recognition. Thus, the primary recipient and beneficiary of the communication is the employee.

Tangential beneficiaries are ordinarily, as in the case here, all part of a management group with a common interest, i.e., the efficient running of the business. Clearly, there is a legitimate raison d'etre for such records, and management has an unquestioned obligation to keep them. We would therefore be loathe to subject an employer to the threat of a libel suit in which a jury might decide, for instance, that the employee should have been given a rating of "average," rather than "needs improvement," or that the employee had an ability, unrecognized and unappreciated by a foolish supervisor, to get along with and lead others.

Yet that result is exactly what Jensen intended to accomplish with his libel action against Hewlett-Packard: to have an "impartial fact-finder" judge whether Phelps was "right" or "wrong" in his criticisms of Jensen, which is to say whether Jensen was more valuable to HewlettPackard than the employer was willing to acknowledge. Based on the facts here, we hold that unless an employer's performance evaluation falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence or reprehensible personal characteristics or behavior, it cannot support a cause of action for libel.

This is true even when the employer's perceptions about an employee's efforts, attitude, performance, potential or worth to the enterprise are objectively wrong and cannot be supported by reference to concrete, provable facts. Moreover, where an employee alleges the employer's negative evaluations are feigned, the only potentially available remedy lies in contract, for breach of the implied covenant of good faith and fair dealing.

The first ground raised by Hewlett-Packard was Jensen's failure to present facts demonstrating the evaluation statement was libelous. In defamation actions, it is entirely appropriate for the court to determine in the first instance "whether the publication could reasonably have been understood to have a libelous meaning." "Libel is a false and unprivileged publication by writing. . .which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him [or her] to be shunned or avoided, or which has a tendency to injure him [or her] in his [or her] occupation." A publication "must contain a false statement of fact" to give rise to liability for defamation. A statement of opinion "cannot be false and is outside the meaning of libel." "[T]he dispositive question. . .is ‘whether a reasonable fact finder could conclude that the published statements imply a probably false factual assertion.'"

The court examines the communication in light of the context in which it was published. The communication's meaning must be considered in reference to relevant factors, such as the occasion of the utterance, the persons addressed, the purpose to be served, and "all of the circumstances attending the publication." Under the above standards, could any of the comments in Phelps's evaluation reasonably be interpreted as false statements of fact? No. First, we note the context: The communication was a 14-page evaluation of Jensen's performance, prepared by Phelps in the course of his designated duties as Jensen's manager. It was one of a series of evaluations, less favorable than those that preceded or followed it.

It documented one manager's assessment of Jensen's work habits, interpersonal skills and level of effort, and it outlined the employer's expectations with regard to Jensen's improvement. It was presented to Jensen for his review and its contents were seen by or made known to a number of management people who participated in periodic employee-ranking sessions. Jensen was given the opportunity to respond to the evaluation, which he did. There is absolutely nothing in the attendant circumstances tending to show the document constituted anything but business-as-usual. Next, the word "evaluation" denotes opinion, not fact. "Evaluation" is defined in Webster's Third New International Dictionary as ". . . the act or result of evaluating: JUDGMENT APPRAISAL, RATING, INTERPRETATION." To "evaluate" is ". . . to examine and judge concerning the worth, quality, significance, amount, degree, or condition of." The dictionary definition is not necessarily dispositive of the fact/opinion issue, but it certainly implies the defendants' intended legitimate purpose of the document, i.e., its use as a management tool for examining, appraising, judging and documenting the employee's performance.

Finally, we turn to the contents of the evaluation, none of which suggests Jensen lacked honesty, integrity or the inherent competence, qualification, capability or fitness to do his job, or that he had reprehensible personal characteristics. Three categories of comments are involved: ratings by which Phelps expressed a value judgment, such as "good," "acceptable" or "unacceptable," about Jensen's comparative level of skills, performance or attitude; directions in which Phelps advised Jensen that he was expected to develop or improve in various areas; and general remarks about Jensen's attitude toward his job responsibilities and his co-workers. But even if the comments were objectively unjustified or made in bad faith, they could not provide a legitimate basis for Jensen's libel claim because they were statements of opinion, not false statements of fact.

It is poor policy to create an atmosphere of fear of liability which stifles management from exercising its "fundamental prerogatives . . . to control the workplace and to retain only the best-qualified employees." Here, there is no claim that the negative evaluation was fabricated as a pretext for prohibited discrimination; rather there is only Jensen's unsubstantiated charge his supervisor's opinion was objectively wrong and subjectively feigned. We are compelled to conclude the court is an inappropriate forum for resolution of this grievance. No matter the denomination of the cause of action, employers should neither be required to justify performance evaluations by reference to objectively provable facts, nor subjected to fear of liability for good faith, but mistaken, judgments about the value of an individual employee to the business enterprise.

1. Would an employer be able to say anything on an evaluation and not be held liable?

2. Do you agree with this opinion? Why or why not?

3. What can a company do to protect itself from such libel suits?