Labor and Employment Articles 

Indiana Court of Appeals Denies Employee’s Defamation Claim Against Former Employer Who Provided a Negative Employment Reference

On June 3, 2003, the Indiana Court of Appeals held that an employee’s execution of an express authorization to release information in connection with a reference request provided an absolute privilege to her former employer and supervisor against her defamation claim. In Eitler v. St. Joseph Regional Medical Center-South Bend Campus, 789 N.E.2d 497 (Ind. Ct. App. 2003), Ms. Eitler voluntarily resigned her employment with St. Joseph Regional Medical Center (the “Hospital”) after her supervisor, Gina Webb, allegedly waged a “campaign” to force Ms. Eitler to resign or be terminated. 

After she resigned, Ms. Eitler applied for employment with Star Light Health Services (“Star Light”). As part of Star Light’s application process, Ms. Eitler was required to send a reference check form entitled “Confidential Reference Check Report” (the “reference form”) to her former employer. The reference form contained an authorization and release provision (“authorization/release”) that exculpated Star Light and the responding party from any and all liability for damages in the furnishing and receiving of information. Ms. Eitler sent the reference form to Ms. Webb who gave her a negative evaluation.

Ms. Eitler filed a lawsuit alleging, among other things, that the Hospital and Ms. Webb had defamed her by giving the negative reference. The trial court granted summary judgment in favor of the Hospital and Ms. Webb, and Ms. Eitler appealed. The Indiana Court of Appeals upheld the trial court’s decision, holding that the authorization/release contained in the reference form provided an absolute privilege to the Hospital and Ms. Webb against Ms. Eitler’s defamation claim. The Court reasoned that Ms. Eitler’s promise to release all parties from “any and all liability” for damages in furnishing and receiving the information was an explicit and unambiguous consent to refrain from the prosecution of all claims against the Hospital and Ms. Webb. Furthermore, Ms. Webb’s response was clearly within the scope of the authorization/release because she did not provide any additional comment or information that Ms. Eilter did not solicit. Even more, Ms. Eitler had reason to know that Ms. Webb’s response was going to be negative in light of the past adverse relationship between the parties. As such, Ms. Eitler consented to the negative connotation of Ms. Webb’s response. 

Finally, the Court rejected Ms. Eilter’s defense that the creation of an absolute privilege by the authorization/release would violate the public policy set forth in Indiana Code § 22-5-3-1(b), which provides that an employer who discloses information about a former employee is immune from civil liability for disclosure and the consequences caused by the disclosure “unless it is proven by a preponderance of the evidence that the information disclosed was known to be false at the time the disclosure was made.” Ms. Eitler contended that permitting the absolute privilege defense would “gut” the proviso in the statute; but the Court disagreed, stating that the absolute privilege granted by the authorization/release served to do the same thing the statute does, i.e., to encourage the free flow of information between employers. Accordingly, the Court concluded that permitting an absolute privilege defense does not violate public policy and that the authorization/release acted to bar Ms. Eitler’s defamation claim.