Defamation in the Termination: Hearn v. PG&E and the Tort the Supreme Court Will Define

The question and where it came from

Nearly every contested termination generates written statements of cause: investigation reports, HR memoranda, authorization e-mails, the termination letter itself. When those statements are false, plaintiffs have long pleaded them as defamation alongside the discharge claims — a tort theory that reaches noneconomic damages, avoids some of the defenses that burden statutory claims, and (unlike a Tameny claim, which lies only against the employer) can implicate individual publishers. Hearn squarely presents whether that strategy works when the defamatory statements are the termination’s stated grounds.

Todd Hearn was a PG&E lineman in the Napa yard. In 2018, amid a company investigation of overtime abuses, he was suspended for an “alarming amount of discrepancies” in his timecards. (Hearn, supra, 108 Cal.App.5th at p. 304, rev.gr.) PG&E’s own corporate security department (CSD) investigated and found two categories of Code of Conduct violations — but also “significant mitigating factors,” including “ongoing practices and explicit and tacit approvals” of the conduct at issue (crews routinely “cabbed up” at home during down time with supervisor permission) and an informal medical accommodation. (Id. at pp. 305–306.) PG&E then hired Tony Mar, a retired PG&E director, to conduct a second investigation. After reading the CSD report, Mar told a PG&E director “our conclusion will be different”; the director responded, “Great.” Mar knew Hearn had supervisor approval to go home but said he would include “verbiage … to emphasize the number and durations of [Hearn’s] stop at homes” — and his December 12, 2018 report omitted the supervisor-approval evidence while concluding Hearn violated the Code of Conduct by misusing company time, misstating work activities, falsifying timecards, and charging unearned meals. (Id. at pp. 306–307.) A month later PG&E terminated Hearn in a letter that tracked the Mar report’s language nearly verbatim. (Id. at pp. 308, 316.)

Hearn sued for whistleblower retaliation (he had repeatedly raised safety concerns about PG&E’s “Tripsaver” reclosing devices in fire-risk areas) and for defamation based on the CSD report, the Mar report, the termination-authorization e-mail, and the termination letter. (Hearn, supra, 108 Cal.App.5th at pp. 307–309, rev.gr.) The trial court denied summary adjudication of the defamation claim: Hearn conceded the statements were conditionally privileged internal communications under Civil Code section 47, subdivision (c), but raised a triable issue of malice as to Mar’s report. (Id. at p. 309.) The jury rejected the section 1102.5 retaliation claim, found the CSD report, e-mail, and letter substantially true — but found the Mar report’s statements not substantially true and made with malice, defeating the common-interest privilege, and awarded $2,160,417 in past and future economic and noneconomic damages. It declined to award punitive damages, and, by stipulation, was never instructed on assumed (presumed) reputational damages. (Id. at pp. 310–311, 317.) The trial court denied PG&E’s JNOV motion, reasoning that Hearn had proved every element of defamation and had brought no contract claim into which the tort could collapse. (Id. at p. 311.)

The decision below: a tort “indistinguishable” from the discharge

The panel majority reversed the JNOV denial. Starting from the trilogy of Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174, and Lazar v. Superior Court (1996) 12 Cal.4th 631, the majority acknowledged the baseline: “employees may generally assert tort claims against their employer, even in the context of their termination.” (Hearn, supra, 108 Cal.App.5th at pp. 312–315, rev.gr.) But it distilled from those cases “two hurdles”: “(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.’” (Id. at p. 315, citing Lazar, at p. 643, and Hunter, at p. 1178, and quoting, in accord, Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 21.)

Hurdle one: same conduct. The majority read the record as showing that PG&E’s post-suspension process “was primarily aimed at documenting and substantiating the findings that led to Hearn’s suspension”; the Mar report was that process’s product, and “the Mar report was the vehicle by which PG&E effectuated Hearn’s termination.” (Hearn, supra, 108 Cal.App.5th at p. 316, rev.gr.) The termination e-mail and letter repeated the report’s operative accusations nearly word for word — which produced what the majority itself called a “disconnect”: the jury found the identical statements substantially true in the e-mail and letter but untrue in the Mar report. (Ibid.) The majority declined to “speculate on the jury’s reasoning” and treated the incongruity as confirming that the alleged harm “was indistinguishable from what would otherwise be an ordinary wrongful termination claim.” (Ibid.)

Hurdle two: termination-only damages. Hearn’s counsel had stipulated to remove CACI No. 1704’s assumed-damages paragraph, agreeing on the record that “all of the damage to [Hearn] stemmed from his termination,” and sought no reputational or republication damages distinct from his job loss. (Hearn, supra, 108 Cal.App.5th at pp. 316–317, rev.gr.) The majority contrasted Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1154, and King v. U.S. Bank National Assn. (2020) 53 Cal.App.5th 675, 700, 704–705 — where defamation and discharge rested on distinct statements and motives — with the Hunter/Soules/Hine line, where the tort was the discharge relabeled. (Id. at pp. 317–318.) It rejected Hearn’s argument that section 47’s malice limitation is the Legislature’s exclusive control on employer defamation liability (id. at p. 318), and concluded the statements were “not separately actionable” but “‘merely the means to the end desired by the employer, i.e., termination of employment.’” (Id. at pp. 318–319, quoting Lazar, at p. 640.) Notably, the majority did not question that Hearn proved every element of defamation, including malice — the claim failed as a category, not on its elements. (Id. at p. 318.)

The dissent: there is no “Foley doctrine”

Presiding Justice Tucher’s dissent frames the majority’s rule as “a special exemption from tort liability for employers who defame employees in the course of terminating their employment.” (Hearn, supra, 108 Cal.App.5th at p. 320 (dis. opn. of Tucher, P. J.), rev.gr.) Its anchor is Lazar‘s admonition that “there is no ‘Foley doctrine’ stating or implying that employers who terminate employees do or should enjoy broad special immunities from tort liability.” (Id. at p. 322, quoting Lazar, supra, 12 Cal.4th at p. 648.) On the dissent’s reading, Hunter failed on its own elements — the plaintiff could not plead detrimental reliance for fraud — whereas “there is no element of defamation that Hearn has failed to prove.” (Id. at p. 323.) And the conduct was not the same: Hearn’s wrongful-discharge theory was section 1102.5 retaliation for safety disclosures, “completely unrelated to the defamatory statements in the Mar report”; his defamation theory was that PG&E terminated him as a consequence of the malicious report, not that it terminated him by means of defaming him. (Id. at pp. 323, 325.)

The dissent’s damages critique is the part most likely to matter on review. Defamation that injures a plaintiff in his occupation is libel per se, actionable without special damages, with reputational harm presumed; and the special damages the statute expressly contemplates — injury “in respect to his or her property, business, trade, profession, or occupation” (Civ. Code, § 48a, subd. (d)(2)) — have job loss as their “most important items.” (Hearn, supra, 108 Cal.App.5th at p. 327 (dis. opn.), rev.gr.) Requiring a defamation plaintiff to show damages from something other than job loss thus excludes precisely what the Legislature made recoverable. The dissent added that reputational injury is “a distinct harm” as a matter of law — the very reason defamation escapes workers’ compensation exclusivity (id. at pp. 327–328, citing Davaris v. Cubaleski (1993) 12 Cal.App.4th 1583, 1590–1592) — and that identical damages flowing from two distinct harms is “legally irrelevant.” (Id. at p. 328 & fn. 5.)

What the grant of review frames

The Supreme Court granted Hearn’s petition on May 14, 2025 (S289581), and limited review to one question, as stated in the Court’s official Issues Pending compilation (Apr. 24, 2026): “May a terminated employee bring a defamation claim against a former employer when the defamation allegedly contributed to the reasons for the termination of that employment or must such a claim be pursued under a wrongful discharge theory?”

The framing captures the doctrinal fork. If the answer is that defamation lies whenever its elements — including malice defeating the section 47(c) privilege — are proved, the Court adopts something close to the dissent: the privilege-plus-malice structure of Civil Code section 47 is the Legislature’s chosen filter for termination-adjacent statements, and Foley‘s contract/tort boundary governs only contract-derivative theories (tortious breach of the implied covenant, Hunter-style fraud). If the answer is that the claim “must … be pursued under a wrongful discharge theory,” the Court constitutionalizes the majority’s two-hurdle test, and the defamation count survives only where the statements or the damages are genuinely independent of the discharge — the Gould/King pattern. A middle path is available: the Court could keep defamation available but police the damages, requiring plaintiffs to anchor recovery in reputational injury (presumed or proved) rather than exclusively in termination-based wage loss — which would make Hearn-style instructional stipulations, not the tort itself, the fatal act.

Note what the posture makes stark: the jury found Hearn’s discharge was not retaliatory, so the defamation verdict was the only liability finding — a plaintiff who “failed to prove wrongful termination” recovering “termination damages … via another label,” as the majority put it (Hearn, supra, 108 Cal.App.5th at p. 317, rev.gr.), or an employer escaping “liability for admittedly tortious conduct,” as the dissent put it (id. at p. 322 (dis. opn.)). The Court took the case on facts where the two characterizations are at their maximum tension.

The compelled self-publication doctrine in the balance

One venerable strand of California defamation law rides on the outcome. In McKinney v. County of Santa Clara (1980) 110 Cal.App.3d 787, a discharged probationary deputy sheriff alleged the county gave him false reasons for his dismissal, which he was then forced to repeat to police agencies where he sought work. The Court of Appeal — deciding “a question of first impression in this state” — held “the originator of the defamatory statement liable for damages caused by the disclosure of the contents of the defamatory statement by the person defamed where such disclosure is the natural and probable consequence of the originator’s actions,” including where the defamed person is “under a strong compulsion to disclose” the statement to third persons, as when prospective employers ask why the last job ended. (Id. at pp. 795–796.) The “strong causal link” between the originator’s falsehood and the compelled repetition, the court reasoned, justifies treating the compelled repetition as the originator’s publication. (Id. at pp. 797–798.)

McKinney is the doctrinal engine of the classic termination-defamation claim: the false stated reason travels with the employee into every job application. Hearn pleaded exactly this — that he “was forced to repeat these defamatory statements to prospective employers who asked why he no longer worked for PG&E.” (Hearn, supra, 108 Cal.App.5th at p. 309, rev.gr.) But because he sought no republication-based damages at trial, the majority could treat the self-publication injury as abandoned. (Id. at p. 317.) If the Supreme Court adopts the majority’s framework, McKinney becomes the survival route: self-publication damages in the job market are analytically distinct from the paycheck lost at termination, and pleading and proving them separately is what keeps the tort independent. If the Court adopts the dissent’s view, McKinney simply resumes its role as a theory of publication. Either way, the doctrine — never disapproved, and endorsed at the Court of Appeal level for four decades — will likely be addressed by the Supreme Court for the first time.

The section 47(c) privilege as the Hearn record presents it

The common-interest privilege (Civ. Code, § 47, subd. (c)) did real work below, and its allocation of protection is central to both opinions. Hearn conceded the four communications were conditionally privileged internal statements among persons with a common interest in an employee-misconduct investigation; the burden thus fell on him to prove malice. (Hearn, supra, 108 Cal.App.5th at p. 309, rev.gr.; see id. at p. 320 (dis. opn.) [privilege covers such statements “only if” made “without malice”].) The jury found malice as to Mar alone — on evidence that he promised a “different” conclusion before finishing his work, engineered “verbiage” to emphasize misconduct, and omitted the known supervisor approvals. (Id. at pp. 306, 310–311.) For the defense bar, the case is a warning that a results-first outside investigation can strip the privilege from the very document the termination rests on; PG&E’s amici (California Employment Law Council and Employers Group) argued the malice findings threaten protections for workplace investigations, a contention the panel declined to reach as beyond the appeal. (Id. at p. 319, fn. 6.) For plaintiffs, Hearn‘s record is the template for a malice showing: divergence between what the investigation actually found and what the decision document says, plus evidence the conclusion preceded the inquiry.

The privilege also explains the stakes of the review question. If section 47(c) plus the malice requirement already calibrates employer exposure for termination-related statements — as the dissent argued and as Hearn urged (Hearn, supra, 108 Cal.App.5th at p. 318, rev.gr.) — then the majority’s categorical bar is a second, judge-made immunity stacked on the statutory one. If instead Foley‘s remedial boundary controls, the privilege is beside the point in same-conduct cases because the claim never gets out of the gate. Relatedly, the dissent’s observation that defamation’s reputational injury escapes workers’ compensation exclusivity (id. at pp. 327–328 (dis. opn.)) connects Hearn to the broader boundary question of when employment injuries sound in tort at all — see our guide to the exclusivity boundary for employment torts.

Key quotes

“[T]he trial court erred in denying PG&E’s JNOV 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.” (Hearn, supra, 108 Cal.App.5th at p. 315, rev.gr.)

“Simply put, the Mar report was the vehicle by which PG&E effectuated Hearn’s termination.” (Id. at p. 316.)

“PG&E seeks to impose on Hearn an additional element he must prove regarding his damages, an element that is foreign to the well-established cause of action for defamation and creates a special exemption from tort liability for employers who defame employees in the course of terminating their employment.” (Id. at p. 320 (dis. opn. of Tucher, P. J.).)

“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.” (Id. at p. 327 (dis. opn.).)

Read the Hearn opinion (CourtListener) →

Practice pointer

Open questions

Beyond the certified question, at least four issues will shape the decision’s reach. First, the fate of compelled self-publication: McKinney has never been reviewed by the Supreme Court, and a same-conduct bar would leave its status — and the pleading needed to invoke it — uncertain in termination cases. Second, the damages line: if a plaintiff proves libel per se, may presumed reputational damages alone carry a verdict where all economic loss flows from the discharge, or does the majority’s second hurdle bar even those? (Compare Hearn, supra, 108 Cal.App.5th at p. 315, rev.gr., with id. at p. 327 (dis. opn.).) Third, the individual-defendant question the panel had no occasion to address: a Tameny claim lies only against the employer, but defamation reaches the supervisor or investigator who publishes the falsehood — if defamation collapses into wrongful discharge, does the individual claim collapse with it? Fourth, the investigation-privilege balance raised by amici (id. at p. 319, fn. 6): whatever the Court says about malice and results-driven investigations will govern the summary-judgment fight in every case where the privilege is conceded and malice is the battleground. The case is tracked on our Employment Docket page; related coverage: wrongful termination in violation of public policy. This analysis will be revised within days of the decision.