United States: Florida Corporate Executive Escapes Defamation Liability For Statements Made In Board Meeting

Last Updated: October 18 2019
Article by Lee S. Brenner and Hannah L. McMeans

On September 18, 2019, the Florida Third District Court of Appeal held in Hullick v. Gibraltar Private Bank & Trust Co. & Hayworth that a corporation’s board of directors’ discussions during a board meeting did not constitute defamation because the board’s intra-corporate communications were not “published” or communicated to a third party. Since the U.S. Supreme Court in Citizens United fortified the notion that corporations are people, the Florida Court of Appeal allows corporations to talk to themselves—without fear of defamation lawsuits.

Hullick v. Gibraltar Private Bank & Trust Co. & Hayworth is set against the backdrop of an allegedly well-documented $1.2 billion Ponzi scheme purportedly orchestrated by a prominent Florida lawyer (now disbarred and serving a 50-year sentence in federal prison).1 Gibraltar Private Bank and Trust Company, one of the appellees (co-defendant below), was one of two banks where the lawyer allegedly laundered money.2

The appellant/plaintiff, Hullick (Appellant), served briefly as Gibraltar’s Chief Operating Officer. During his tenure, he voiced concerns about suspicious activity in a client’s accounts to, among others, the co-defendant/appellee Hayworth, then Chief Executive Officer of Gibraltar and Chair of Gibraltar’s Board of Directors. Appellant was subsequently fired. Approximately two years after his termination, Appellant filed suit against Hayworth alleging, among other claims, that Hayworth made defamatory statements about him at a board meeting post-termination, destroying his reputation in the banking community and making it difficult for him to find employment. Hullick at 3.

The primary issue before the Florida Court of Appeal (Court) was whether Hayworth’s allegedly defamatory statements to other members of Gibraltar’s Board of Directors were “published” to a third party. Id. at 5. Publication to a third party is an essential element of defamation; by definition, a statement made to oneself or to the person alleging the defamation cannot be defamatory. See id.

Appellant argued that, because Gibraltar’s Board of Directors is comprised of a majority of non-employee directors, Hayworth’s statements were made to directors who were not employees, i.e., not part of the corporation itself. See id. at 5-6. Therefore, Appellant concluded that Hayworth’s statements were “published” to third parties. See id. The Court disagreed. Id.

A corporation’s board of directors is traditionally considered the “head” of its corporate body. Prior to this decision, Florida precedent dictated that: (1) statements made to corporate executives or managerial employees of a corporation are, in effect, made to the corporation itself; (2) the acts of a corporation’s board of directors are the acts of the corporation itself; and (3) for defamation purposes, if the party hearing or seeing the purported defamation is so closely connected with the potential defamation defendant that they merge into a single entity, there is no publication to a third person. See id. at 5-7. In Hullick, the Court concluded that the Gibraltar directors (even non-employee directors) and the then-CEO were “so closely connected” with Gibraltar that communications among the Board and Hayworth were “tantamount to the corporation talking to itself.” See id. at 6. Thus, the Court held that statements Hayworth made to other members of Gibraltar’s board were not published to a third party and were therefore not defamatory.

Footnotes

1 See, e.g., Appellant Brief at 3, http://www.flabizlaw.org/files/bizlitagenda0618.pdf.

2 https://www.bizjournals.com/southflorida/news/2012/02/16/gibraltar-bank-announces-rothstein.html.

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