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April 23, 2020

Tilkey v. Allstate Insurance Company (2020) 56 Cal.App.5th 521

The California Court of Appeal upheld a plaintiff’s claim that he was compelled to defame himself in order to explain a false report by his employer, allowing him to recover punitive damages for the self-defamation.

Allstate Insurance Company terminated plaintiff’s employment as a life insurance broker based on his arrest for domestic violence. Allstate reported its reason for the termination to a government agency on a form accessible to any firm that hires licensed brokers, incorrectly stating that plaintiff had “engag[ed] in threatening behavior and/or acts of physical harm or violence” to another person.

Plaintiff sued Allstate under a theory of compelled self-published defamation, alleging that Allstate published a non-privileged, untruthful written explanation for plaintiff’s termination on a government form available to plaintiff’s prospective employers—thereby compelling plaintiff to explain the reason for his discharge to prospective employers. Allstate appealed. The Court of Appeal affirmed, holding that compelled self-published defamation is a viable liability theory because it was foreseeable that plaintiff would be compelled to disclose the defendant’s statement to third party prospective employers after learning the contents.

The Court of Appeal also held that punitive damages are available in cases involving compelled self-published defamation, disagreeing with a decision by the Minnesota Supreme Court. But the court further held that the jury’s punitive damages award, which was more than nine time greater than the defamation damages, was excessive. The court noted that the punitive damages should be compared only to the defamation damages, and not the entire compensatory award that included $960,000 for wrongful termination. Accordingly, the Court of Appeal remanded the case for the trial court to determine the proper amount of punitive damages based solely on defamation.