Duma v. Carson City Hospital involved Marcia Duma's attempt to seek compensation from her former employer after she was fired during a "down-sizing." A 10-year ER nurse, Duma was accused of stealing pain medicines and falsifying records. She adamantly denied the claim and was incensed when management used the occasion to inform staff that there were "mounds of evidence" of her guilt and that she did not deny the claim or defend herself. She filed suit alleging defamation, invasion of privacy and intentional interference with a business relationship. The local trial judge dismissed all her claims, holding that the statements by management were "privileged."
The Court of Appeals upheld the dismissal of part of Duma's lawsuit, but reinstated two theories. The Appeals judges held that since she could only identify 19 people who had been told the false account of her firing, the "audience" who heard the "false light invasion of privacy" was too small to support that theory. The Court held that if she is to pursue her claim of wrongful interference, she will need to document her efforts to achieve employment after the defamatory statements, and the causative impact of the Defendant's interference with her ability to find nursing work.
With regard to the defamation claim, the Court affirmed the dismissal as to two management employees, who hadn't defamed her broadly enough, but reinstated the claim as to one manager and the Hospital. Since the statements were made in the course of the defendant's duties with the hospital, the hospital would be vicariously liable for any wrongful conduct. And since the statements were made by the Defendant manager to "improve morale" or to "stop rumors," they were made for the Hospital's own business purpose and not privileged. Since the statements were shared with non-management employees who had no "need to know," the law of defamation applied to make them potentially actionable.