Page 1
C.A. Tosses $2.2 Million Defamation Judgment Against PG&E
Majority Says Claim Is ‘Wrongful Termination by Another Name’ Where Based on Same Conduct and Damages As Rejected Retaliation Cause, Drawing Dissent for Creating New Hurdle in Employee Tort Actions
By Kimber Cooley, associate editor
Div. Three of the First District Court of Appeal has held, in a 2-1 decision, that a trial judge erred in denying a request for judgment notwithstanding the verdict on a defamation claim filed by a former employee against a utility, finding that the cause of action was “wrongful termination by another name” because it related to the same conduct and damages as the worker’s retaliation claim that was rejected by the jury.
Friday’s opinion, authored by Justice Ioana Petrou and joined in by Justice Victor Rodríguez, upends a $2.16 million judgment against Pacific Gas & Electric Company (“PG&E) in an action filed by former employee Todd Hearn, who had worked for the utility for over 20 years.
According to Hearn’s complaint, filed in 2020, the company fired him in retaliation for raising safety concerns, beginning in 2017, over the company’s use of a new type of electrical equipment—called a “Tripsaver”— which he claims might increase the risks of utility lines sparking wildfires by automatically re-energizing a line after contact with a foreign object without requiring human inspection.
He also alleges that the report on which his termination was based falsely accused him of misusing company time, causing him reputational and occupational harm.
Finding that the defamation claim was not sufficiently independent of the wrongful termination claim, Petrou wrote:
“[T]he trial court erred in denying PG&E’s [motion for judgment notwithstanding the verdict] because Hearn may not recover for defamation when it arose from the same conduct giving rise to his termination and the only result is the loss of his employment. In other words, Hearn cannot recover damages for wrongful termination by recasting his claim as one for defamation.”
Presiding Justice Alison M. Tucher dissented.
PG&E Investigation
PG&E contends that Hearn was fired after he was identified in an independent investigation as one of five employees who were potentially submitting false timecards. The company hired Anthony Mar, a retired director of electric operations with the utility, to investigate the five flagged employees.
Mar was aware that earlier investigations had found that the company lacked consistency regarding rules governing what employees were allowed to do when on duty and not actively engaged in specific jobs.
However, he submitted a report identifying several incidents of potential misconduct by Hearn, one of which accused the plaintiff of reporting eight hours of “straight time charged for inclement weather,” noting that GPS data showed that Hearn went home for 90 minutes before returning to his work site. The document failed to record concrete evidence as to the weather conditions that day or how they may have affected projects.
Hearn’s employment was terminated in 2019 after PG&E received Mar’s report, which concluded that “Hearn violated the PG&E Code of Conduct by misusing company time, company vehicles, misstating his work activities and locations by falsifying his timecards and charging meals that he was not entitled to.”
The plaintiff contends that PG&E terminated his employment due to false statements in the Mar report and that he was forced to repeat the lies to prospective employers who asked why he no longer worked for the company.
A jury found for the plaintiff on the defamation claim, concluding that Hearn had proven that the statements in the Mar report were “not substantially true” and were made with malice. The panel awarded Hearn damages for past and future economic and non-economic damages.
Napa Superior Court Judge Cynthia P. Smith denied PG&E’s motion for judgment notwithstanding the verdict (“JNOV”). Smith acknowledged that, according to California Supreme Court precedent, an employee cannot sue based on tort claims which arise “from the same conduct forming the basis of the wrongful termination claims” but found that Hearn’s defamation cause of action was sufficiently independent.
Same Conduct
Petrou said:
“The trial court properly identified the question as whether an employee may sue in tort for the same conduct that forms the basis for that employee’s wrongful termination claim. And this is the question PG&E asks us to resolve on appeal: ‘In a wrongful termination case, can a plaintiff recover in tort based on the same underlying harm as caused by the discharge?’ As we explain below, the trial court erred in its analysis of applicable California Supreme Court authority.”
She pointed to the 1988 California Supreme Court case of Foley v. Interactive Data Corp., and its progeny, as delineating the ability of a terminated employee to recover tort damages and remarked:
“[T]hese cases recognize employees may generally assert tort claims against their employer, even in the context of their termination….
“But [they] set forth parameters that may limit an employee’s ability to obtain damages from such torts within an employment termination context. Specifically, the California Supreme Court has specified two hurdles employees must overcome: (1) such tort claims must be based on conduct other than that giving rise to the employee’s termination…; and (2) the damages sought cannot exclusively ‘result from [the] termination itself.’ We do not interpret this second factor as requiring a plaintiff to allege damages uniquely specific to defamation; it merely requires that the damages resulting from any alleged defamation cannot arise exclusively from his or her termination.”
Disciplinary Context
Turning to Hearn’s allegations, the jurist wrote:
“The defamatory statements contained in the Mar report were generated within the scope and context of Hearn’s disciplinary proceedings and termination, and both the defamation claim and Hearn’s termination arose from the same conduct—i.e., issuance of the Mar report. Simply put, the Mar report was the vehicle by which PG&E effectuated Hearn’s termination.”
Petrou continued:
“Moreover, the damages arising from PG&E’s defamation were solely related to Hearn’s termination….Hearn did not seek any damages separate from his loss of employment, such as damages arising from republication to third parties. Accordingly, the only damages alleged ‘result[ed] from [the] termination itself.’ ”
She added:
“In reaching our conclusion, we do not question whether Hearn proved all elements of a defamation claim. The jury found he did so, and PG&E has not challenged that aspect of the jury verdict on appeal. Likewise, PG&E has not challenged the jury instructions and cannot allege error based on the accuracy of those instructions. But whether Hearn proved all elements of defamation or whether the jury was appropriately instructed is not relevant to the question posed here—whether the defamatory statements are separately actionable….And the record indicates the defamatory statements here are not separately actionable.”
Tucher’s Dissent
Tucher argued that the majority mischaracterized the nature of the two claims at issue, saying :
“I disagree with the majority’s assertion that ‘Hearn’s defamation claim was founded on the same conduct—i.e., the creation of the Mar report and its use in his termination—that would form the basis for a wrongful termination.’….The creation of the Mar report was not the basis for the wrongful termination claim that Hearn brought in this case. He claimed PG&E had wrongfully discharged him in retaliation for his disclosure of suspected safety violations, a violation…completely unrelated to the defamatory statements in the Mar report.”
She continued:
“[T]he harm caused by defamation is a distinct harm, regardless of whether the tort is committed by an employer. Because defamation is an injury to reputation, a defendant who commits this tort necessarily causes reputational harm distinct from the harm experienced when an employment contract is breached….The jury found that Hearn suffered just such an injury to his reputation, and it was as a consequence of that injury to his reputation that his employment was terminated. The fact that PG&E’s defamatory conduct caused Hearn to incur damages equivalent to those that would have flowed from a retaliatory wrongful termination, had there been one, should not insulate PG&E from tort liability for the defamation that actually occurred.”
In a footnote, Tucher commented:
“The majority perceives a ‘discordance’ in allowing an employee who fails to prove wrongful termination to recover ‘termination damages’ only because it conflates an issue of harm with an issue of damages….The harm Hearn proved in support of his cause of action for defamation was that PG&E injured his reputation, causing him to lose his job. The retaliatory discharge claim Hearn failed to prove was premised on a different alleged harm: that PG&E fired him because he reported safety violations. That the same damages flowed from these two distinct harms is legally irrelevant.”
The case is Hearn v. Pacific Gas & Electric Company, 2025 S.O.S. 229
Copyright 2025, Metropolitan News Company