may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Northland Merchandisers, Inc.,
John Menard, et al.,
Filed July 22, 1997
Toussaint, Chief Judge
Hennepin County District Court
File No. 911163
Michael S. Kreidler, Louise A. Behrendt, Stich, Angell, Kreidler, Brownson & Ballou, P.A., The Crossings, Suite 120, 250 Second Avenue South, Minneapolis, MN 55401 (for respondents)
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.
Appellant Northland Merchandisers, Inc., (Northland) challenges the trial court's (1) entry of summary judgment in favor of respondents John Menard and Menard, Inc., (collectively "Menard") on its defamation claim, (2) order of conditional remittitur and other post trial motions, and (3) refusal to allow Northland to amend its complaint to seek punitive damages. Because the alleged defamatory statements cannot be reasonably understood to be actual facts, the trial court did not abuse its discretion in ordering a conditional remittitur, and there is not clear and convincing evidence that John Menard acted with willful indifference, we affirm.
Northland, wholly owned by Douglas Nelson and Mike Samuels, represents manufacturers of hardware, housewares, and paint products to retailers. Northland is paid, on a commission basis for the sales it makes to various wholesales and retailers, by the manufacturers it represents. Northland sold products to Menard, wholly owned by John Menard. The dispute between the parties arose when Nelson and Samuels bought a hardware franchise, that allegedly competes with Menard. John Menard took exception to this purchase and sent a letter on September 29, 1988, to several manufacturers, which were represented by Northland.
The letter stated in part:
It has been brought to my attention that the Rep Agency you currently employ to service our account (Northland Merchandisers) owns a business (Coon Rapids "Do-it Center") that is in direct competition with us. To make matters worse they have hired the hardware Dept. Manager of our Coon Rapids Store to manage this business. I can find no way of justifying this conflict of interest.
This seems a matter of poor judgment at best and terrible ETHICS in any case. I am sure that an above board, ethical company like [yours] does not want to have people such as this representing you and your products. From my view, I can not have my competitor in my stores and offices on a daily basis, using the confidential, insider information and employee contacts they obtain against us. It is an intolerable situation.
(AA.1) ("the Menard letter").
Northland claims (1) the letter defamed them and the trial court erred by granting summary judgment in favor of Menard on Northland's defamation claim, (2) the trial court determined that statements in the letter were non-actionable opinions, and (3) that because the Menard letter involved a purely private matter the First Amendment protection of speech is inapplicable.
Northland alleged that as a result of this letter it was defamed and lost business relationships with several manufacturers. To be defamatory, a statement must be communicated to somebody other than the plaintiff, be false, and tend to harm the plaintiff's reputation and lower him or her in the eyes of the community. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). Not all statements of opinion are automatically protected by the First Amendment; some may be subject to defamation actions. Milkovich v. Lorain Journal Co., 497 U.S. 1, 18, 110 S. Ct. 2695, 2705 (1990). The only statements, which are absolutely protected by the First Amendment, are statements about matters of public concern that are not provable as false and "statements that cannot 'reasonably [be] interpreted as stating actual facts' about an individual." Id. at 20, 110 S. Ct. at 2706 (quoting Hustler Magazine v. Falwell, 485 U.S. 46, 50, 108 S. Ct. 876, 879 (1988)).
Northland urges us to adopt the analysis used in other cases of this court which hold that defamation actions involving strictly nonpublic matters are not protected by constitutional considerations and should be analyzed under state common law. See, e.g., Bradley v. Hubbard Broadcasting, Inc., 471 N.W.2d 670, 674 (Minn. App. 1991) ("[d]efamation actions arising from communications made in a private employment setting are analyzed under Minnesota common law"), review denied (Minn. Aug. 2, 1991); Weissman v. Sri Lanka Curry House, Inc., 469 N.W.2d 471, 473 (Minn. App. 1991) ("private plaintiff/private issue defamation actions must be analyzed under state common law principles"). We agree, however, that "Milkovich did not abolish constitutional protection for opinions, but instead merely narrowed the privilege." Hunt v. University of Minn., 465 N.W.2d 88, 94 (Minn. App. 1991). As the Hunt court recognized, remarks that are not reasonably interpreted as stating actual facts are absolutely protected by the First Amendment. Id.; see also Lund v. Chicago & N.W. Transp. Co., 467 N.W.2d 366, 369, n.1 (Minn. App. 1991) (when statements are "clearly opinions," state's interest fades and First Amendment predominates), review denied (Minn. June 19, 1991). Here, the statements in the Menard letter about a "conflict of interest" and "terrible ETHICS" cannot be reasonably interpreted as stating actual facts about Northland and its principals. See Hunt, 465 N.W.2d at 94 (statements about plaintiff's warmth, sincerity, and integrity are not actionable because they cannot be proven false). We conclude that the trial court did not abuse its discretion in determining that the statements in the letter are John Menard's opinion and cannot reasonably be understood as stating facts.
Menard claims that because there has been a second jury trial on all the issues, this court cannot review rulings of the first trial. However, in cases involving an order for conditional remittitur, when a plaintiff rejects the remittitur and a second trial is held, the plaintiff may seek review of the remittitur order even after the second trial. Sandt v. Hylen, 301 Minn. 475, 477 n.1, 224 N.W.2d 342, 343 n.1 (1974) ("under the rules of civil appellate procedure where appellants rejected the offer of the remittitur and had a second trial with which they were not satisfied, it is proper for this court to consider the review of the order in the first case").
An appellate court will reverse a trial court's decision to grant a conditional remittitur only if there has been an abuse of discretion. Carlson v. Mutual Serv. Cas. Ins. Co., 527 N.W.2d 580, 584 (Minn. App. 1995), review denied (Minn. Apr. 27, 1995). In deciding that the first jury's damage award was not supported by the evidence, the trial court concluded that (1) the figures used by Northland's financial expert were not adjusted to account for a reduction in expenses, (2) the expert mistakenly assumed that the figure for gross commissions attributable to Northland's lost clients was based on an eight-month period, when in fact the figure represented total commissions for the entire year, and (3) no damages could be attributed to lost commissions from TilePak and One Ten Corporation because the evidence showed that neither of those manufacturers terminated its relationship with Northland as a result of the Menard letter.
The measure of damages in a case such as this is normally lost net profits, but when the alleged tortious conduct does not significantly reduce the plaintiff's overhead and expenses, then lost gross profits may be used to measure damages. Cardinal Consulting Co. v. Circo Resorts, Inc., 297 N.W.2d 260, 269 (Minn. 1980). The trial court found the first jury's damage award could not stand because the only credible testimony showed that Northland's loss of certain accounts caused a reduction in its expenses as well as its revenues. Northland contends that other testimony established that Northland's expenses did not decline, even after it lost the accounts. We note that Menard's expert's conclusions about the ratio of expenses to gross revenues were based entirely upon his review of Northland's accounting records. We also note that the trial court adopted the ratio most favorable to Northland. The trial court heard all the testimony and acted within its discretion when it made determinations about that testimony.
The trial court found that Northland's financial expert mistakenly assumed that a figure for gross compensation from lost accounts was for an eight-month period, when in fact, the figure was based on a twelve-month period. Northland argues that the trial court erred when it adjusted for this mistake because in correcting the error, the trial court relied on documents that were not admitted into evidence. A trial court's findings and conclusions must ordinarily be drawn from the evidence in the record. Carlson Real Estate Co. v. Soltan, 549 N.W.2d 376, 380 (Minn. App. 1996), review denied (Minn. Aug. 20, 1996). But here, any error is harmless because the documents used by the trial court were Northland's own internal financial reports, acknowledged as such during cross-examination of one of Northland's principals. See Minn. R. Civ. P. 61 (court must disregard any error that does not affect parties' substantial rights).
Northland argues the trial court also erred in determining that the jury's damage award was inflated because it included commissions from lost sales to TilePak and One Ten Corporation (One Ten). The trial court found that One Ten never did business with Menard, never received the Menard letter, and went out of business during the time Northland claimed it lost profits. The court found that TilePak did not sever its relationship with Northland as a result of the Menard letter, but that they mutually terminated their relationship two years later. Other than testimony by Northland's principals that their "understanding" was that both One Ten and TilePak terminated their relationships with Northland because of the Menard letter, there is no evidence to show cause and effect for these damages. We agree with the trial court that it erred in admitting testimony about the principals' "understanding"; Northland has not shown that such a ruling was an abuse of discretion. See Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990) (question of whether to admit or exclude evidence rests within broad discretion of trial court).
Northland argues that it should have been allowed to amend its complaint to add a claim for punitive damages. We will not reverse a trial court's decision about whether to allow an amendment to pleadings unless the trial court abuses its discretion. See Utecht v. Shopko Dep't Store, 324 N.W.2d 652, 654 (Minn. 1982).
Punitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show a willful indifference to the rights or safety of others.
Minn. Stat. § 549.20 (1988). "Willful indifference" does not imply an actual intent to harm the plaintiff, but a knowing disregard of the plaintiff's rights or safety. Wiring v. Kinney Shoe Co., 461 N.W.2d 374, 381 (Minn. 1990).
We find no abuse of discretion in the trial court's conclusion that there is not clear and convincing evidence that Menard acted with willful indifference. As the trial court explained:
The negligence that defendant John Menard exhibited in sending out the September 29, 1988, letter, without verifying its contents, may arguably rise to the level of gross negligence, however, this failure is not enough to warrant the imposition of punitive damages.
We further note that in the second trial, the jury found that Menard did not act intentionally.
[ ]1 The statute was revised in 1990 to require "deliberate disregard" for the rights of others rather than "willful indifference." 1990 Minn. Laws ch. 555 § 15. The willful indifference standard still applies to this action because it arose before May 4, 1990. See Claflin v. Commercial State Bank, 487 N.W.2d 242, 251 (Minn. App. 1992) (explaining effective date of amendment to statute), review denied (Minn.Aug. 4, 1992).