California Court Clarifies Limits in Pacific Gas & Electric Wrongful Termination Case

In a recent decision that will shape how employment lawsuits are litigated in California, the Court of Appeal for the First Appellate District clarified that employees cannot recover damages for defamation when the alleged defamatory statements are tied directly to the same conduct underlying a wrongful termination claim. The case, Hearn v. Pacific Gas & Electric Co., 108 Cal. App. 5th 301 (2025) is a good example of how overlapping tort claims are evaluated during wrongful termination cases.

Case: Todd Hearn v. Pacific Gas & Electric Co.

Court: California Court of Appeals, First Appellate District, Division Three

Case No.: 108 Cal. App. 5th 301 (2025)

Get to Know the Plaintiff in the Case, Todd Hearn:

Todd Hearn, the plaintiff in the case, was an experienced lineman for Pacific Gas & Electric Company (PG&E). Hearn was suspended and later terminated from his lineman position after the company conducted an internal investigation into alleged timekeeping and GPS record discrepancies indicating Hearn's reported work hours were inaccurate. According to the company’s investigation, there were inconsistencies between Hearn’s reported work hours and the GPS location data of his vehicle.

Hearn argued that the company investigated his reported hours in retaliation after he complained about unsafe working conditions. After his termination, he filed a civil lawsuit asserting multiple claims:

• Retaliation under Labor Code § 1102.5 (whistleblower retaliation),

• Retaliation for complaints about unsafe conditions under Labor Code § 6310,

• Wrongful termination in violation of public policy, and

• Defamation based on the allegedly false information circulated during the investigation.

Both the retaliation and defamation claims proceeded to trial.

Get to Know the Defendant: Pacific Gas & Electric Company

Pacific Gas & Electric Company (PG&E) is one of California’s largest public utilities providers. In response to Hearn's allegations, the company insisted that the investigation was legitimate and adhered to company protocol. PG&E denied retaliatory motive allegations and argued that its managers acted within the scope of their employment when they reported and documented the alleged timekeeping discrepancies. At trial, the jury sided with PG&E on the retaliation claim but found in favor of Hearn on the defamation claim, awarding him damages for harm allegedly caused by statements in the internal investigation report. PG&E appealed the defamation verdict, arguing that Hearn’s defamation claim was derivative of his wrongful termination claim and therefore barred under California law.

A History of the Case: Appeal and Reversal

On appeal, the jury’s defamation award was reversed, with the California Court of Appeals ruling that an employee cannot obtain separate tort damages for defamation when the claim arises from the same conduct or injury as a wrongful termination claim.

The Court’s reasoning emphasized two key principles:

• Defamation claims must be based on conduct distinct from the termination itself.

• Damages for defamation cannot be identical to those resulting from the termination.

Because the alleged defamatory statements—contained in internal investigative reports—were created as part of the disciplinary and termination process, the Court held that Hearn’s defamation claim was not independent from his termination. The Court concluded that Hearn could not “recover damages for wrongful termination by recasting his claim as one for defamation.” He had not demonstrated any reputational harm beyond the financial and emotional damages associated with losing his job.

The Main Question Being Considered: Can Termination-Related Statements Support a Defamation Claim?

The central issue in Hearn v. PG&E was whether an employee can pursue a defamation claim when the allegedly defamatory statements are part of the termination process. The Court’s answer: No—unless the statements or damages are distinct from the termination itself. So communications or reports created during internal investigations (such as disciplinary findings or HR summaries) are generally protected when they directly relate to an employee’s termination. However, defamatory statements made after termination or outside the scope of an internal investigation may still give rise to valid claims.

Why This Case Matters to California Workers and Employers

The Hearn decision provides critical clarity for both sides of employment disputes.

For Employees: The case underscores the importance of identifying distinct harms when bringing multiple claims. If all alleged damages stem from termination itself, courts may reject related defamation claims as duplicative.

For Employers: The ruling in the case reinforces that internal investigation communications (when made in good faith and within the scope of employment) are generally protected from defamation liability. However, companies should use caution as statements made outside disciplinary channels or shared with individuals not directly involved in the investigation could still expose employers to risk.

The case ultimately strengthens existing legal protections for fair internal investigations while confirming limits on overlapping tort recovery in employment cases.

FAQ: Hearn v. Pacific Gas & Electric Co.

Q: What did the Court of Appeal decide in Hearn v. PG&E?

A: The Court ruled that employees cannot recover defamation damages when the alleged defamatory statements are part of the same conduct underlying a wrongful termination claim.

Q: Why did the Court reverse the jury’s verdict?

A: The Court found that Hearn’s alleged reputational harm was not distinct from his loss of employment. The investigative reports that formed the basis of his defamation claim were created as part of the termination process itself.

Q: What does this mean for California employees bringing multiple claims?

A: Employees must show that each claim—such as defamation, retaliation, or wrongful termination—is based on separate conduct or results in distinct damages. Otherwise, the claims may be deemed duplicative.

Q: How can employers use this decision in future cases?

A: Employers can cite Hearn v. PG&E to defend against defamation claims tied to internal investigations, provided those communications were limited to individuals with a legitimate business reason to receive them.

If you believe you were wrongfully terminated or defamed during a workplace investigation, the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik DeBlouw LLP can help. Contact our offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago today to schedule a free consultation and learn more about your rights under California labor law.