A recent federal case shows how a workplace investigation can flip fast—from harassment complaint to defamation claim. The employer followed the playbook and won. The accuser did not.
TL;DR: A federal court in Ohio threw out a former Chief Legal Officer’s race discrimination, retaliation, and contract claims after he was fired following a harassment investigation. The court found no defamation by the company or its president because they relied on counsel’s investigation and limited disclosure; it therefore did not need to decide the qualified-privilege issue. But the court refused to dismiss the defamation claim against the employee who accused him, holding that knowingly false sexual-harassment allegations can be defamation per se, which allows presumed damages (at least nominal) even without proof of actual damages.
🔗 Read the decision (S.D. Ohio, Oct. 10, 2025)
What set this off
The company’s Chief Legal Officer investigated a female employee’s sexual-harassment complaint against a senior manager. He recommended termination and helped carry it out.
Months later, that same employee accused the Chief Legal Officer, the same executive who had investigated her earlier complaint, of making advances toward her years before. The company engaged an outside investigator, who reported that parts of her accusation were substantiated and that the Chief Legal Officer admitted to a “flirtatious” relationship. He was placed on leave and then terminated. The company’s termination letter also cited his handling of the earlier CFO complaint as a separate reason for discharge.
The Chief Legal Officer sued the company, its leadership, and the accuser for race discrimination, retaliation, breach of contract, and defamation.
How the court sorted it
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Discrimination and retaliation failed. The record did not show race-based comparators or protected activity. Asking for a raise, without raising discrimination, was not protected activity.
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Contract and quasi-contract claims failed. No enforceable promise or clear, unambiguous commitment supported a 2020 raise or bonus.
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Defamation against the company and its president failed. The court found no requisite fault because they relied on outside counsel and limited disclosure, so it did not need to decide the qualified-privilege question.
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Defamation against the accuser survives. For purposes of her motion, she did not contest falsity. False sexual-harassment accusations can be defamation per se under Ohio law, so damages are presumed. Only the accuser remains in the case.
Defamation and internal investigations: what employers should know
The court dismissed the defamation claim against the company and its president because they acted within well-recognized limits. They discussed the harassment allegations only with those who needed to know, including HR, outside counsel, and a few executives, and they relied on the investigator’s findings rather than spreading rumors or adding editorial spin.
That matters because under Ohio (and most states) law, employers have a qualified privilege to make internal statements about employee conduct when done in good faith, for a proper business purpose, and limited to appropriate audiences.
In plain English: this privilege is a legal shield that allows employers to communicate about alleged misconduct without being automatically exposed to defamation liability. It protects those acting responsibly in the course of an investigation, but it is not absolute. The privilege is lost if the speaker knows the statement is false, acts recklessly, or shares it too broadly.
That privilege disappears if:
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statements are made with knowledge of falsity or reckless disregard for the truth, or
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they are shared beyond those with a legitimate business need to know, such as idle gossip or informal rumor-spreading.
Here, the president’s comments were based on the outside investigator’s report and communicated only to a narrow group of managers. That good-faith reliance on counsel helped defeat the defamation claim.
Importantly, the court did not suggest that an employer can be liable simply for acting on an accusation that later proves false. What matters is good faith. When an employer investigates promptly, relies on credible information, and makes decisions without malice or bias, it stays protected even if the underlying complaint turns out to be unfounded.
Employer takeaways you can use today
1) Investigate promptly, document thoroughly, and be consistent.
Consistency in process and decision-making is a powerful shield against discrimination and retaliation claims.
2) Take every complaint of harassment seriously.
Even informal or reluctant reports trigger an employer’s duty to assess and act. The company here investigated quickly and relied on outside counsel, key moves that supported its good-faith posture in court. A prompt, impartial, and well-documented response is the best protection against liability and second-guessing.
3) Good faith is your best defense.
Encourage reporting and protect complainants from retaliation. When employers investigate in good faith, relying on credible evidence, documentation, and professional guidance, they are protected even if an accusation later proves false.
4) Limit dissemination to a need-to-know circle.
Sharing investigation details narrowly and in reliance on counsel’s findings helps avoid defamation exposure for the organization.
5) Watch your words: internal communications can still create defamation risk.
The law protects good-faith, business-related, confidential discussions, but not exaggeration, speculation, or careless gossip. Train managers and HR staff on the “qualified privilege” standard so they know where the legal line is.
Bottom line
The company’s playbook worked: act fast, use outside counsel, and keep the circle small. The only person still in court is the one who made the accusation the plaintiff claims was false.