SACRAMENTO (CN) - A California appeals court has reversed a multimillion-dollar ruling against Carrier Corp. and employees who allegedly defamed a retired worker by falsely accusing him of stealing money from the company.
After John Burdette retired, Carrier sued him in federal court to recover money it claimed he stole. Burdette fired back with a counterclaim accusing the company and its employees of slander for spreading the malicious allegations. To bolster his claim, he filed the depositions of two employees as "new evidence" that "clearly shows that rumor and gossip to the effect that Burdette was stealing was rampant in both the Sacramento and Reno offices of Carrier."
The federal court refused to let Burdette produce new evidence during the period covered by the claim and ruled that the remaining statements were privileged.
Having lost his counterclaim, Burdette turned to the state court, where he filed and won a defamation action against the company and "other unnamed employees." A jury awarded him more than $1 million in compensatory damages and $3.5 million in punitive damages against Carrier, and $9,000 in punitive damages against Carrier employee Edward Fitzpatrick.
Carrier appealed the verdict, arguing that Burdette's state claims were barred by the federal judgment, since both complaints involved the same events.
The appeals court agreed, ruling that claim preclusion bars the claim against Carrier and Fitzpatrick based on depositions made during the period covered by the federal claim. However, the court allowed that "each new defamatory statement may be made the basis of a separate cause of action."
It reversed the judgment for a reassessment of damages. See ruling.
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