California Appellate Court Reverses Multi-Million Verdict in Wrongful Termination/Defamation Case

Earlier this year, the California Court of Appeal, First Appellate District reversed a multi-million dollar verdict in favor of an employee in a complex wrongful termination and defamation case (Hearn v. Pacific Gas & Elec. Co.). The court determined that the trial court erred in ruling that the plaintiff (a former employee) could pursue an independent defamation claim against the company for an incident that was fundamentally the same as their wrongful termination case. Here, our California employment attorney provides an overview of the case and the appellate court decision.

Case Review: Hearn v. Pacific Gas & Elec. Co. 

The Facts 

An employee named Todd Hearn began his career at Pacific Gas & Electric Company (PG&E) back in 1996. He started working as a meter reader and later advanced to a position as a lineman in Napa. In 2018, PG&E initiated an investigation into alleged performance issues, including excessive meal costs, frequent rest periods, and potential misconduct. The investigation eventually led to the suspension of Mr. Hearn for alleged discrepancies about his time reporting. An internal report by investigator Anthony Mar concluded that Mr. Hearn had violated company policies by misusing company time. Subsequently, PG&E terminated Mr. Hearn’s employment. He filed a claim for wrongful termination based on retaliation and defamation based on the investigative report.

 Trial Court Decision 

The case proceeded to trial. Both the wrongful termination claim (for retaliation) and the defamation claim were at issue. The jury found in favor of PG&E on the retaliation claim. It determined that Mr. Hearn’s termination was not due to his safety complaints. However, the jury sided with Hearn on the defamation claim. It found that the company’s investigation report contained false statements made with malice. The jury awarded Hearn over $2 million in defamation damages.

 Appellate Court Reversal 

The California Court of Appeal, First Appellate District reversed the decision. The court agreed with the employer’s argument that Mr. Hearn’s defamation claim was not independently actionable from his retaliation claim because it was intrinsically linked to his termination from the company. Further, the court noted that the damages sought were solely related to his loss of his job and income, on which the jury had awarded him nothing.

In other words, the appellate court held that when defamatory statements are directly connected to an employee’s termination and the alleged harm does not extend beyond job loss, a defamation claim cannot stand independently. The appellate court emphasized that allowing him to recover on such an intertwined claim would effectively permit plaintiffs to recast wrongful termination claims as a defamation lawsuit. The decision has important implications because it restricts employees from suing employers for defamation, where the only alleged defamation was in the context of wrongful termination.

Note: The decision from the appellate court panel was 2 to 1.

Consult With Our California Employment Lawyer Today

At Sloat Law Group, APC, our California employment attorney is standing by, ready to help your business find the best solution. If you have any questions about wrongful termination cases, please do not hesitate to contact us today for a fully confidential consultation. We represent employers in Coachella Valley, Riverside County, and Statewide in California.

Source:

law.justia.com/cases/california/court-of-appeal/2025/a167742.html