This question recently came up in my law practice: Can a company officer be personally liable for defamation? The answer is simple: Yes.
Minnesota courts have held that an officer of the company can be personally liable for defamatory statements when the officer was involved in “directing, authorizing, and approving a defamatory [statement].” See Derosa v. McKenzie, 936 N.W.2d 342, 346 (Minn. 2019).
However, there is a notable exception. A “corporate officer cannot be held personally liable for a company’s defamatory acts by virtue of job title alone. Id. Thus, a person’s individual liability depends on their involvement in the defamation.
In other words, the question for personal liability is whether the officer participated in the defamation, such as directing, authorizing, or approving the defamatory statement.
Explanation from the Minnesota Supreme Court
In 2019, the Minnesota Supreme Court explained:
“It is the universal rule that an officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor ….” Ellingson v. World Amusement Serv. Ass’n, 175 Minn. 563, 222 N.W. 335, 339 (1928). We have long recognized that actions other than authoring a defamatory statement may constitute taking part in the commission of the tort. See, e.g. , Frankson v. Design Space Int’l, 394 N.W.2d 140, 144 (Minn. 1986) (concluding that intra-corporate preparation of a defamatory termination letter and distribution of that letter to a personnel file constituted publication sufficient for a defamation action); McKenzie v. Wm. J. Burns Int’l Detective Agency, 149 Minn. 311, 183 N.W. 516, 517 (1921) (concluding that in-house statements were publications, though subject to privilege); Hebner v. Great N. Ry. Co., 78 Minn. 289, 80 N.W. 1128, 1129–30 (1899) (same). Neither party presents us with a substantial or compelling reason to create an exception to the universal rule as it applies to the law of defamation. We decline to do so now. The court of appeals correctly concluded that Minnesota law does not recognize “reverse-vicarious liability.” A corporate officer cannot be held personally liable for a company’s defamatory acts by virtue of job title alone. 19 C.J.S. Corporations § 630 (2019). DeRosa is not pursuing a new theory of tort liability, however. DeRosa alleges that McKenzie, as a corporate officer, personally took part in the commission of a tort by directing, authorizing, and approving a defamatory press release. According to the universal rule, if DeRosa’s allegations are true, McKenzie may be held personally liable for his participation.
Tip to Avoid Problems
The tip to avoid legal consequences is simple. To avoid personal liability, don’t participate in your company’s defamation or illegal acts. This includes directing, authorizing, or approving actions behind the scenes.
Does this apply to an LLC, corporation, or limited partnership?
Yes. This doctrine applies to all business types.
Does this apply to others in the company or only officers?
This doctrine applies to all positions in a company including owners, LLC members, and shareholders who are involved in defamatory or other tortious acts.
What types of statements are defamation?
Doesn’t the limited liability of an LLC or corporation apply?
There is a doctrine called “piercing the corporate shield” that deals with whether a business owner (shareholder or LLC member) can be personally liable for acts of the company. That doctrine doesn’t apply here because that doctrine relates to acts of the company where the owner is not involved. When an owner is involved, the owner may have liability. While this article deals with defamation, other examples would be
- injuring someone through negligence while on the job (you are always liable for your own negligence)
- assaulting someone (you can’t avoid liability simply because you have a business entity)
- engaging in misrepresentation or fraud (you are responsible for your own acts)
Just like any case, involvement in illegal acts is proven by evidence. This could include internal company emails, testimony of employees in the company, or other proof an officer was involved in directing, authorizing, or approving the defamatory statement.