## Facts

- Shannon worked for Taylor AMC/Jeep, Inc. (Taylor) for about twelve years and served as parts manager for roughly eight years.
- Shannon suspected that someone was trying to sell stolen Jeep parts to Taylor and contacted James Black, a police officer and friend, for advice.
- Black told Shannon he would need “hard evidence,” and Shannon bought two Jeep hardtops he believed were stolen and stored them in the parts department.
- When an employee reported that a customer wanted to buy one of the hardtops, Shannon told the employee the hardtops were not for sale because they might be stolen.
- Taylor fired Shannon, allegedly based on suspected involvement with stolen parts; Shannon asserted Black was going to prepare a police report that same day concerning the suspected stolen goods.
- After Shannon’s termination, Taylor hired a new parts manager, Laurie Cherup, who had previously been disciplined by Shannon.
- Cherup was overheard telling customers that Shannon had been fired for “getting caught stealing” and for being involved in theft of parts.
- Shannon denied wrongdoing and sued Taylor for defamation (slander per se), alleging the statements falsely accused him of criminal conduct.
- Taylor contended Cherup’s statements to customers were protected by a qualified privilege because the dealership had an interest in maintaining customer trust and addressing concerns about stolen parts.
- The trial court determined the statements were subject to a qualified privilege and treated the case as one requiring Shannon to overcome the privilege.
- Shannon appealed, challenging the finding/instruction of qualified privilege for statements made to customers.

## Issues

1. Whether an employee’s statements to dealership customers accusing a former employee of theft are protected by a qualified privilege, such that the plaintiff must overcome the privilege to recover for slander.
2. Whether attorney-fee and cost awards based on Michigan’s mediation/case-evaluation sanctions were proper, including whether any award to Taylor was premature in light of the appellate ruling on defamation.

## Decision

- The court held the trial court erred by treating Cherup’s customer statements as qualifiedly privileged.
- The court reversed the judgment on the defamation claim and remanded for a new trial under proper instructions.
- The court affirmed the attorney-fee award to AMC (a prevailing party whose favorable disposition was not disturbed on appeal).
- The court reversed Taylor’s attorney-fee award as premature because the result on remand could change the parties’ positions for purposes of mediation/case-evaluation sanctions.
- Disposition: affirmed in part, reversed in part, and remanded.

## Legal Principles

- A qualified privilege applies only when the communication is made in good faith on a proper occasion and the publisher and recipient share a corresponding interest or duty in the subject matter.
- In the employment setting, qualified privilege commonly protects internal workplace communications about employee misconduct to those who have responsibility for, or a business reason to receive, the information.
- Statements to customers about the reasons for an employee’s discharge are not automatically privileged; the employer must still show the customer had a legitimate, corresponding interest or duty to receive that information.
- Accusing a person of theft or other criminal conduct is slander per se in Michigan, allowing recovery without proof of special damages if the statement is false and not privileged.
- When a court incorrectly instructs the jury that a qualified privilege applies (thereby changing the plaintiff’s burden), the error may warrant reversal and a new trial if it could have affected the verdict.
- Attorney-fee and cost awards tied to mediation/case-evaluation results may need to be reconsidered after remand when a retrial can change the parties’ comparative success.

## Conclusion

Shannon v. Taylor AMC/Jeep, Inc. held that a dealership did not have a qualified privilege to have its manager tell customers that a former parts manager was fired for stealing, because the customer audience lacked the corresponding interest or duty required for privilege; the defamation judgment was reversed and remanded for a new trial, AMC’s fee award was affirmed, and Taylor’s fee award was set aside as premature pending the final outcome after retrial.


Shannon v. Taylor AMC/Jeep, Inc., 425 N.W.2d 165 (1988)