Case: Jensen v. Hewlett-Packard Co.

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, Hewlett-

Packard 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 Hewlett-

Packard 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 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 make 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.

Use the format to answer:

1. Facts.

2. Issues

3 Analysis of each issue individually applying the request facts and law

4. Decision and why