Employers are often confronted with calls or requests for information regarding individuals whom the employer previously employed. Many employers will only provide limited information regarding the former employee. When a company whose main purpose is to conduct background checks contacts a former employer, however, some employers treat that contact differently. The question is, should they?
In Pendergrass v. ChoicePoint , Theodore Pendergrass worked for Rite Aid as a shift supervisor in Philadelphia. In January 2006, Rite Aid involuntarily terminated Pendergrass’ employment because of, according to Pendergrass, losses that Rite Aid had purportedly sustained on his account. At the time of the termination of his employment, Pendergrass signed a statement regarding the basis of his termination.
According to Pendergrass, at his unemployment compensation hearing, Rite Aid asserted that Pendergrass had “engage[ed] in fraudulent transactions related to coupons [,] inappropriate cash register modifications [,] and […] stealing merchandise.” Despite Rite Aid’s position at the hearing, Pendergrass was awarded unemployment compensation benefits by the referee. Pendergrass maintains that he never admitted to theft and, based upon being awarded unemployment compensation, any allegations regarding theft were unfounded.
In attempting to obtain a new job, Pendergrass applied for positions with a number of retailers. Each of these retailers, however, rejected Pendergrass, according to the opinion. Pendergrass believed that these rejections were based on a background check report that the retailers had obtained from ChoicePoint. ChoicePoint is an employee screening firm that provides background information on individuals to its subscribing clients.
According to Pendergrass, the information that prevented him from obtaining new employment was Rite Aid’s report that Pendergrass has committed acts of theft, which had been reported by ChoicePoint as “cash register fraud and theft of merchandise.” According to Pendergrass, this prevented him from obtaining employment at two entities for which he had been approved for hiring (pending the background check).
Pendergrass first learned of the report by Rite Aid to ChoicePoint on or about Nov. 30, 2006. Pendergrass subsequently sued Rite Aid and ChoicePoint alleging, among other things, defamation. That complaint was filed Jan. 10, 2008, according to the opinion.
Rite Aid sought to dismiss the defamation claim on the grounds that it was filed beyond the applicable statute of limitations. Under Pennsylvania law, the statute of limitations for defamation claims is one year from the date of publication. Rite Aid argued that Pendergrass knew of the publication of the allegedly defamatory statement as of Nov. 30, 2006, and by waiting to file his complaint until January 2008, Pendergrass had let the statute of limitations on his defamation claim run. Thus, according to Rite Aid, Pendergrass’ defamation claim was time-barred, the opinion noted.
Pendergrass responded to Rite Aid by arguing that each time the Rite Aid based report was viewed by a subscribing client of ChoicePoint, a new tort each with its own statute of limitations was created. Further, Pendergrass maintained that holding Rite Aid liable for “repetition of the defamatory statement if the repetition was authorized or expected” was consistent with the Restatement (Second) of Torts . As such, Pendergrass maintained that Rite Aid should be liable for each time its report to ChoicePoint was viewed on or after Jan.10, 2007, according to the opinion.
Based on these arguments, the court focused its attention on the single publication rule. Pursuant to that rule, which Pennsylvania has adopted by statute (42 Pa. Cons. Stat. § 8341(b)), “any one edition of a book or newspaper, or any one radio, television broadcast, exhibition of a motion picture or similar aggregate communication is a single publication.” The Pennsylvania Supreme Court has stated that the single publication rule was meant to “alleviate [the] problem of multiplicity of causes of action” such that “a single publication of material such as a newspaper or magazine [would not] result in a separate cause of action each time a reader views the defamatory article.” In other words, “it is the original printing of the defamatory material and not the circulation of it which results in a cause of action.” As the 9th Circuit has stated, “[t]he single publication rule is designed to protect defendants from harassment through multiple suits and to reduce the drain of libel cases on judicial resources.”
In this case, the court noted that the “risks of an infinite limitations period and multiple suits are reduced significantly” because the report at issue was only made available to subscribing members of a database and not to the general public. Accordingly, the court held that Pennsylvania courts would not apply the single publication rule to the facts at hand. Based on its prediction of what Pennsylvania courts would hold, the court then held that the single publication rule did not apply to the case at hand. Thus, each and every instance of a subscriber accessing the allegedly defamatory report from the database would be considered a separate cause of action with its own statute of limitations. Accordingly, the court granted the motion to dismiss the defamation count only as to republications that took place prior to Jan. 10, 2007 — one year prior to the filing of the complaint.
With this decision, employers are left with a quandary as to what to report when background check companies, such as ChoicePoint, request information regarding former employees. One can always say, “tell the truth,” as truth is a defense to defamation. That, however, does not necessarily answer the question fully as, presumably, Rite Aid felt it was conveying truthful information based on the statement signed by plaintiff. In any event, employers must be highly vigilant in monitoring their communications with background check companies and ensuring that any such reports are completed with only 100 percent provable facts. •
TODD ALAN EWAN is a partner in the labor and employment law practice group of Mitts Milavec. Ewan advises and counsels clients in various aspects of the employer-employee relationship, including personnel policies, employment contracts, severance agreements and noncompetition, nonsolicitation and nondisclosure agreements.
CAROLYN M. PLUMP is a partner in the firm’s labor and employment law practice group. Plump has successfully negotiated labor contracts, counseled clients regarding regulatory compliance, prepared corporate employment policies and handbooks, conducted investigations and advised companies regarding the hiring, firing and disciplining of employees. She has represented clients in litigation, mediation and arbitration matters in federal court and before administrative agencies.