Last year, the North Carolina Court of Appeals issued a strange decision finding that the state's common law defamation claim potentially applied to a situation where the alleged defamatory statements were contained in an employee's annual performance review. The appeals court in White v. Trew concluded that the defamation claim's requirement that the statement be "published" was fulfilled because another individual in the organization who was independent of the review process read the evaluation.

This case raised troubling issues for employers. Previous North Carolina decisions had concluded that in the employment context, employees of a single employer are not considered third parties to one another. Therefore, no publication occurs when the alleged defamatory comments are communicated internally. By concluding that internal employee evaluation documents could result in allegations of defamation, employers could be reluctant to provide employees with honest feedback or to share those evaluations with others in the company with a legitimate interest in such performance information.

Fortunately for employers, last month the North Carolina Supreme Court overruled the Court of Appeals' decision. The Supreme Court concluded that the doctrine of sovereign immunity prevented the plaintiff (who was a faculty member at N.C. State) from suing his public employer. The Court never addressed the publication issue.

Because the case was reversed on other grounds, plaintiffs could argue that the portion of the Court of Appeals' opinion dealing with publication remains valid law. However, many courts view the precedential value of such reversed decisions as limited at best. Given the other established case law on this point, North Carolina employers can continue to take the position that internal communications about an employee are by definition not defamatory.