CAN AN EMPLOYER'S "BAD REFERENCE" BE ACTIONABLE?

In this case, Liverpool was unable to find unemployment due to his old employer furnishing reports of his refusal to take a drug test to new prospective employers. The action was pursuant to New York State common law and New York Labor Law § 215. Liverpool claims that Con-Way made a series of defamatory statements about him to prospective employers relating to a random drug test to which he was subjected while at Con-Way, and that Con-Way made these statements in retaliation for Liverpool's application for and ultimate attainment of unemployment benefits.

MACHEL LIVERPOOL, Plaintiff, v. CON-WAY, INC., CON-WAY CENTRAL EXPRESS and CON-WAY FREIGHT, Defendants., No. 08-CV-4076 (JG),. United States District Court, E.D. New York, November 18, 2010:

"With regard to the second element, Con-Way argues that it had a qualified privilege as Liverpool's former employer to provide information on drug or alcohol tests to his prospective employers pursuant to DOT regulations. See Jung Hee Lee Han v. State, 588 N.Y.S.2d 358, 360 (2d Dep't 1992) (qualified privilege is applicable in defamation cases where "the person making the statements does so fairly in the discharge of a public or private duty in which the person has an interest, and where the statement is made to a person or persons with a corresponding interest or duty"); see also De Sapio v. Kohlmeyer, 383 N.Y.S.2d 16, 17 (1st Dep't 1976) ("A qualified privilege exists for the purpose of permitting a prior employer to give a prospective employer honest information as to the character of a former employee even though such information may prove ultimately to be inaccurate . . . .") (citation omitted). Assuming Con-Way has established the requisite duty and interest for invocation of the privilege, there is still a genuine issue of material fact as to whether it acted with actual malice in making the statements regarding Liverpool's alleged refusal of a drug test.

The protection of a qualified privilege is dissolved if the defendant spoke with "malice," which is established upon the plaintiff's showing either that the defendant was motivated by "spite or ill will," Liberman v. Gelstein, 80 N.Y.2d 429, 437 (1992) (stating the common law definition of malice), or that the defendant made the statement with "knowledge that the statement was false or with reckless disregard of whether it was false or not," id. at 438 (quoting New York Times Co. v. Sullivan, 376 U.S. 254, 280 (1964)) (quotation marks and brackets omitted) (stating the federal constitutional definition of "actual malice"). See id. at 438 ("[W]e have recognized that the constitutional as well as the common-law standard will suffice to defeat a conditional privilege . . . .") (citations omitted). I have no difficulty concluding that a rational juror could find either malice standard met in this case.^[7] There are several facts that would support such findings: the contentiousness surrounding Liverpool's application for unemployment benefits; the timing of Con-Way's reports that Liverpool had "refused" a drug test, which began only after Liverpool had instituted the benefits proceedings implicating Con-Way;^[8] Con-Way's failure to refer to a DOT violation in Liverpool's termination documentation, its standard email to management regarding his termination, or its submissions in the benefits proceedings; and the self-contradictory nature of Con-Way's records of Liverpool's drug test. Accordingly, I find that there is a genuine issue of material fact as to whether Con-Way acted solely out of spite or ill will in making its statements about Liverpool's having refused a drug test, see Albert v. Loksen, 239 F.3d 256, 272 (2d Cir. 2001), or alternatively, whether it made those statements knowing they were false or with a high degree of awareness of their probable falsity, see id.; Liberman, 80 N.Y.2d at 438 (quoting Garrison v. Louisiana, 379 U.S. 64, 74 (1964)).^[9]"