Hagebak v. Stone, No. 22,486.

• Docket Nº: No. 22,486.
• Citation: 2003 NMCA 7, 133 N.M. 75, 61 P.3d 201
• Case Date: December 09, 2002
• Court: Court of Appeals of New Mexico

61 P.3d 201
133 N.M. 75
2003 NMCA 7

Robert HAGEBAK, Plaintiff-Appellant,
v.
Anita STONE, Defendant-Appellee

No. 22,486.

Court of Appeals of New Mexico.

December 9, 2002.

61 P.3d 203

Richard A. Allen, The Law Office of Richard A. Allen, Albuquerque, NM, for Appellant

Jack N. Hardwick Sommer, Udall & Hardwick, P.A., Santa Fe, NM, for Appellee.

OPINION

BOSSON, Chief Judge.

{1} This appeal involves two overlapping claims in tort: defamation and prima facie tort. In granting summary judgment against Robert Hagebak on his defamation claim, the district court held, as a matter of first impression in New Mexico, that intracorporate communications among corporate employees and agents are not "published" to third parties, and therefore cannot be the basis for a claim in defamation. The district court also granted summary judgment against the claim in prima facie tort, because it was based on the same alleged conduct as the claim for defamation. We reverse summary judgment on both claims and remand for further proceedings.

BACKGROUND

{2} Hagebak is a psychologist who practiced in Texas for thirty years before moving to New Mexico in June 1995 to accept a position with Los Alamos Family Council (LAFC). During Hagebak's employment at LAFC, Anita Stone was LAFC's fiscal officer and Michael Duxler was the clinical director. In January 1996, Duxler terminated Hagebak's employment with LAFC. During testimony at a corporate grievance hearing requested by Hagebak, Stone described Hagebak's patient load, productivity, billing, and the fiscal impact of Hagebak's performance. Stone's testimony was largely critical of Hagebak. Following the hearing, the LAFC Board of Directors voted to deny Hagebak's request for reinstatement.

{3} Hagebak filed suit against LAFC, Duxler, and Stone in January 1999, alleging in several different counts that he had been unjustly terminated and damaged in "an effort to cover up improprieties in [LAFC's] billing and fiscal management." This appeal concerns only Hagebak's claims against Stone for defamation and prima facie tort. Hagebak contended that Stone made false statements about him at the grievance hearing and portrayed him as incompetent in his profession, adversely affecting his chances for reinstatement and damaging his professional reputation. The district court granted summary judgment against Hagebak on those claims and Hagebak appeals.

DISCUSSION

{4} Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ciup v. Chevron U.S.A., Inc., 1996-NMSC-062, ¶ 7, 122 N.M. 537, 928 P.2d 263. We construe all reasonable inferences in favor of the party opposing summary judgment and consider the factual merits of the issues raised in the light most favorable to support a trial on the merits. Ruiz v. Garcia, 115 N.M. 269, 271, 850 P.2d 972, 974 (1993); Sarracino v. Martinez, 117 N.M. 193, 194, 870 P.2d 155, 156 (Ct.App.1994). We review the summary judgment de novo as an issue of law. Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582.

Defamation: Intracorporate Communication Exception to Publication

{5} Defamation, which is defined in New Mexico as a wrongful and unprivileged

61 P.3d 204

injury to a person's reputation, requires publication to be actionable. See UJI 13-1001 NMRA 2002 (defining defamation); UJI 13-1002(B) NMRA 2002 (listing elements of defamation action, including publication); see also Clough v. Adventist Health Sys., Inc., 108 N.M. 801, 806, 780 P.2d 627, 632 (1989) (describing publication element of defamation). The publication requirement is based on the assumption that a statement, neither seen nor heard by a third party, cannot cause harm to one's reputation. Frank J. Cavico, Defamation in the Private Sector: The Libelous and Slanderous Employer, 24 Dayton L.Rev. 405, 430 (1999). In New Mexico, publication is defined as "an intentional or negligent communication to one other than the person defamed." UJI 13-1003 NMRA 2002 (emphasis omitted)

{6} A number of jurisdictions have recognized an intracorporate communication exception to the law of defamation, holding that communications among the employees, officers, or agents of a corporation are not "published," because they do not extend beyond the corporation. See, e.g., Starr v. Pearle Vision, Inc., 54 F.3d 1548, 1553 (10th Cir.1995) (applying Oklahoma law and holding that communication between agents or representatives of a corporation does not constitute publication). New Mexico courts have not previously discussed whether to recognize this exception under New Mexico law, and accordingly, we address the question as a matter of first impression.

{7} In electing to adopt this exception, the district court ruled that each of Stone's statements was "an intracorporate communication made by [Stone] within the scope of her duties as an employee of [LAFC]. Therefore, [Stone] did not publish defamatory statements concerning ... Hagebak. Since there was no publication, there is no cause of action for defamation." The parties agree that Stone's statements were intracorporate communications made by Stone within the course of her employment at LAFC to other employees and agents of the corporation. Thus, the only remaining question is whether the district court was correct in recognizing the exception under state law. We now turn to an analysis of that question.

{8} Courts are split over the intracorporate communication exception. See generally Jane M. Draper, Annotation, Defamation: Publication by Intracorporate Communication of Employee's Evaluation, 47 A.L.R.4th 674, 1986 WL 361438 (1986); 1 Robert D. Sack, Sack on Defamation § 2.5.3.1 (3d ed.2002). A number of jurisdictions agree with Stone's position that intracorporate communications are not considered published under the law of defamation. See, e.g., Starr, 54 F.3d at 1553 (applying Oklahoma law); Noel v. Andrus, 810 F.2d 1388, 1393 (5th Cir.1987) (applying Louisiana law); Halsell v. Kimberly-Clark Corp., 683 F.2d 285, 288-89 (8th Cir.1982) (applying Wisconsin law); Agee v. Huggins, 888 F.Supp. 1573, 1580 (N.D.Ga.1995) (applying Georgia law); Keddie v. Pennsylvania State Univ., 412 F.Supp. 1264, 1277 (M.D.Pa.1976) (applying Pennsylvania law); Williams v. A.L. Williams & Assocs., Inc., 555 So.2d 121, 124 (Ala.1989); Lovelace v. Long John Silver's, Inc., 841 S.W.2d 682, 685 (W.D.Mo.Ct.App.1992); M & R Inv. Co. v. Mandarino, 103 Nev. 711, 748 P.2d 488, 491 (1987) (per curiam); Woods v. Helmi, 758 S.W.2d 219, 223 (Tenn.Ct.Ap.1988); Prins v. Holland-North Am. Mortgage Co., 107 Wash. 206, 181 P. 680, 680 (1919).

{9} The intracorporate communication exception derives from agency theory. Sack, supra, § 2.5.3.1. A corporation can act only through its agents or employees. Under agency theory, employees acting on behalf of the corporation are "`not third persons vis-a-vis the corporation.'" Hayes v. Wal-Mart Stores, Inc., 953 F.Supp. 1334, 1340 (M.D.Ala.1996) (applying Alabama law and describing special publication exception applicable to intracorporate communication) (quoting Nelson v. Lapeyrouse Grain Corp., 534 So.2d 1085, 1093 (Ala.1988)); see also UJI 13-1003 (defining publication as communication to a party other than the one defamed). Accordingly, an intracorporate communication between employees or agents is not considered "published" because the corporation, in effect, is merely "`communicating with itself.'" Starr, 54 F.3d at 1553 (quoting Magnolia Petroleum Co. v. Davidson, 194 Okla. 115, 148 P.2d 468, 471 (1944)).

61 P.3d 205

{10} The exception finds some support in public policy. To make an informed decision, corporations need to communicate internally in a free and candid manner. The possibility of litigation may make employees less willing to come forward with truthful statements about sensitive corporate matters. A chilling effect on employee communication may impede a corporation's ability to investigate important subjects like alleged employee misconduct. As a result, the corporation may be less likely to take necessary corrective action, even if in the best interests of the corporation, its shareholders, and the public. See, e.g., Lovelace, 841 S.W.2d at 685 (stating that communication between the corporation and its personnel is necessary to the efficient running of a business and is the only means whereby a corporation can inform itself about employee conduct); see also Ruth A. Kennedy, Insulating Sexual Harassment Grievance Procedures From the Chilling Effect of Defamation Litigation, 69 Wash. L.Rev. 235, 236 (1994) (stating the need for a new "hybrid" grievance procedure privilege)

{11} On the other hand, a number of jurisdictions have rejected the intracorporate communication exception. See, e.g., Jones v. Britt Airways, Inc., 622 F.Supp. 389, 391 (N.D.Ill.1985) (applying Illinois law); Pirre v. Printing Devs., Inc., 468 F.Supp. 1028, 1041-42 (S.D.N.Y.1979) (applying New York law); Kelly v. Gen. Tel. Co., 136 Cal.App.3d 278, 186 Cal.Rptr. 184, 186 (1982); Torosyan v. Boehringer Ingelheim Pharm., Inc., 234 Conn. 1, 662 A.2d 89, 103 (1995) (per curiam); Southern Bell Tel. & Tel. Co. v. Barnes, 443 So.2d 1085, 1086 (Fla.Dist.Ct.App.1984); Luttrell v. United Tel. Sys., Inc., 9 Kan.App.2d 620, 683 P.2d 1292, 1294 (1984); Bander v. Metro. Life Ins. Co., 313 Mass. 337, 47 N.E.2d 595, 601 (Mass.1943); Brantley v. Zantop Int'l Airlines, Inc., 617 F.Supp. 1032, 1034 (E.D.Mich.1985) (applying Michigan law); Ramos v. Henry C. Beck Co., 711 S.W.2d 331, 335 (Tex.App.1986).

{12} Some of these jurisdictions acknowledge the need to protect corporations with regard to internal communications. They disagree, however, that corporations require what amounts to an absolute privilege barring all defamation lawsuits. They prefer, instead, a qualified privilege that precludes lawsuits if the defamatory statements are made in good faith. See, e.g., Jones,...