$340,622 judgment against School District overturned

By Cy Ryan

Thursday, Aug. 6, 2009 | 2:03 p.m.

CARSON CITY – The Nevada Supreme Court has overturned a $340,622 judgment against the Clark County School District, accused of making defamatory statements about a firm that marketed computer-based instruction for teachers.

The court, in its ruling, also expanded protection from defamation suits to individuals, not just lawyers who make statements when there is threatened or is legal action.

Chief Justice James Hardesty, who wrote the unanimous opinion of the three-judge panel of the court, said “Thus, where a judicial proceeding has commenced or is, in good faith, under serious consideration, we determine no need to limit the absolute privilege to communications made by attorneys.”

Teachers in the school district can increase their salaries by obtaining additional degrees or taking graduate level courses. And until 2002, teachers who took and completed the courses offered by Virtual Education Software, Inc. were eligible for pay raises.

George Ann Rice, the associate superintendent of the district’s human resources department, decided that the courses offered by Virtual Education were not rigorous enough. So those courses were eliminated and teachers could not gain any raise by taking them.

Virtual Education threatened suit. Rice sent a letter to the company saying the courses offered were not credit-bearing toward any degree at universities and some of them could be completed in three to five hours.

Rice said the tests by the company could be successfully passed without reading the material. And there was no safeguard to determine that the teacher enrolled actually took the test.

Virtual Education filed suit putting forth five claims. Four were dismissed and the fifth went to a jury that awarded $161,024 to Virtual Education. That grew to $340,622 with pre-judgment interest and attorney fees.

The company contended it had lost money since the Rice letter and her subsequent letters to inquiring teachers.

Hardesty wrote that the letter of Rice “was absolutely privileged” from a defamation suit.

Virtual Education maintained that the absolute privilege applies only to lawyers when a suit is threatened or filed. The court said, “There is no good reason to distinguish between communications between lawyers and nonlawyers.”

The business also sought money based on defamatory statements about its product. The court said this was a claim was for business disparagement and not defamation. And it failed to prove there was malice in the remarks made.

The court said Virtual Education also failed to present sufficient evidence to show a loss in profits was caused by the statements of Rice.

The other two justices who joined in the decision were Ron Parraguirre and Michael Douglas.