South-Western Legal Studies in Business

Company Board May Give Negative Opinion About Job Performance of Manager
Description Virginia high court reversed a defamation judgment in favor of a company CEO who was criticized in a report about company problems that was circulated by the board of directors as it was looking to restructure the company. The negative statements were either fact or opinion that were reasonable under the circumstances.
Topic Torts
Key Words Defamation; Opinion; Truth
C A S E   S U M M A R Y
Facts Williams was CEO of ACN Energy. Two months before he was fired by the board of directors he was told by the board that his work was excellent. After he was fired, the board, trying to raise new funding for the company, circulated a private memo to various companies that explained past managerial incompetence and other company matters related to past problems and future plans. Williams sued for defamation, as the memo indicated that he was incompetent. The jury awarded him $500,000 in damages.
Decision

Reversed. "The statements contained in the alleged defamatory paragraphs are either true or constitute opinion." Some of the statements in the memo are statements of fact regarding the problems in the company. The board has the right to express an opinion about the performance of managers, especially in a confidential memo that it had the right to circulate in an effort to raise funds.

Citation American Communications Network, Inc. v. Williams, 568 S.E.2d 683 (Sup. Ct., Va., 2002)

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