LawyersUSA

A FedEx employee fired after his employer repeatedly stated that he had shipped drugs before it investigated the matter can sue for libel but not for intentional infliction of emotional distress, the 1st Circuit has ruled in vacating a $4 million award.

FedEx conducted an abrupt 45-minute interview during which the employee admitted that he had violated company policy by using his employee discount to ship a package for his wife's friend, but said he didn't know its contents.

FedEx immediately suspended him, escorted him off the premises and later fired him. Although forensic testing conducted during FedEx's investigation confirmed no illegal drugs were discovered, it continued stating the employee had shipped drugs.

The employee sued for slander, libel and intentional infliction of emotional distress. He testified about his sleepless nights and anxiety.

The employer asserted he was dismissed for violating the employee shipping policy rather than for shipping drugs.

The employee argued that FedEx's entire course of conduct in repeatedly publishing the defamatory statements and failing to investigate amounted to extreme and outrageous conduct supporting his claim for intentional infliction of emotional distress.

The court disagreed.

"[T]o the extent that [the employee's emotional distress] claim is predicated on defamatory statements, the conduct must be considered under the framework of [his] libel claim, which … cannot, as a matter of law, satisfy the 'extreme and outrageous conduct' requirement of the [intentional infliction of emotional distress] claim," the court said.

But the court rejected the employer's argument that its statements didn't libel the employee because they were protected by the employer's conditional privilege regarding the discharge of an employee.

"[R]egardless of the reasons behind the dismissal, once FedEx was on notice that the drug allegations were questionable, it was obligated to either stop repeating them or adequately investigate them. It did neither. As a result, the jury was entitled to conclude that FedEx had 'improper motives' and thereby lost the benefit of the conditional privilege because it acted with reckless disregard for the truth."

The court cited similar cases from the 1st, 2nd, and 10th Circuits, as well as from state courts in Connecticut, Minnesota and New York.

U.S. Court of Appeals, 1st Circuit. Soto-Lebron v. Federal Express Corp., No. 06-2501. August 20, 2008. Lawyers USA No. 99310627. Click here for the full text of this opinion.