may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
American Iron and Supply Company, Inc. et al.,
Dubow Textiles, Inc., et al.,
Filed May 25, 1999
Affirmed in part and reversed in part.
Toussaint, Chief Judge
Hennepin County District Court
File No. PI982083
Michael J. Ford, Dyan J. Ebert, Quinlivan & Hughes, P.A., 400 South First Street, Suite 600, St. Cloud, MN 56302 (for appellant Dubow Textiles, Inc.) and
Kim A. Pennington, Pennington & Lies, P.A., 1111 First Street North, St. Cloud, MN 56302 (for appellants Dubow Textiles, Inc. and Robert Dubow) and
William Davern, Cousineau, McGuire & Anderson, Chartered, 600 Travelers Express Tower, 1550 Utica Avenue South, Minneapolis, MN 55416 (for appellant Robert Dubow)
Considered and decided by Toussaint, Chief Judge, Halbrooks, Judge, and Foley, Judge.[*]
TOUSSAINT, Chief Judge
Appellants Robert Dubow and Dubow Textiles, Inc. challenge a district court order denying their motion to dismiss under chapter 554 of the Minnesota Statutes. Appellants contend that Minn. Stat. § 554.03 (1998) immunizes them against respondents' defamation and interference with contract and prospective business advantage claims. Because respondents met their burden of proving that appellants' conduct is not immune from liability only with respect to the defamation claim, we affirm in part and reverse in part.
Appellant Robert Dubow is the owner of Dubow Textiles, Inc., a St. Cloud company. Respondent American Iron and Supply Company, Inc. (AIS) is a Minneapolis scrap metal recycler that arranged to install a portable metal shredder on the property of Midway Iron and Steel in St. Cloud. Advised that the property was not zoned for operation of AIS's metal shredder, Midway sought rezoning from the St. Cloud Planning Office. Dubow, who opposed the shredder installation and rezoning, expressed his disapproval to the St. Cloud Planning Director.
Unsatisfied with the planning department's response, Dubow wrote a letter to the editor of the St. Cloud Times, questioning city officials' consideration of the zoning change despite alleged detrimental environmental effects of the shredder's operation. The portion of the letter pertinent to this lawsuit reads:
American Iron has told our city planners that they will only shred clean steel, but the owner of Midway Iron has been quoted, as saying crushed cars will soon follow. American Iron is not to be trusted! They have a history dating back 40 years of corruption and legal violations. Two of the owners of American Iron have spent time in prison for theft (from the city of Minneapolis) and tax evasion. They have been linked to potentially beneficial political contributions. Is this the type of company we should encourage into St. Cloud? Are these the types of people we should trust? If this project is so good for Grede Foundry, why not put it on their site?
The letter stated that news articles dating back to 1954 substantiated the facts in the letter. The St. Cloud Times published an edited version of the letter in its November 27, 1997 edition, omitting the sentences about alleged criminal and political activities of the company's owners:
American Iron is not to be trusted. The company has a history dating back 40 years of corruption and legal violations. Is this the type of company we should encourage into St. Cloud? Are these the types of people we should trust? If this project is so good for Grede Foundry, why not put it on their site?
On January 10, 1998, Dubow gave his original (unedited) letter to Philips Recycling, Inc., a Midway competitor. With Dubow's permission, Philips mailed the letter to all residents in two zip codes surrounding the Midway site. Two days later, the St. Cloud Planning Commission unanimously voted down AIS and Midway's request for approval of the shredder installation. Presentation of AIS and Midway's rezoning application to the St. Cloud City Council was scheduled for March 9, 1998.
In February 1998, after refuting the statements in the January letter and asking Dubow for a retraction, respondents commenced this lawsuit. Respondents alleged defamation and tortious interference with contract and prospective business advantage. The district court's scheduling order directed that discovery should be completed by September 25, 1998. On May 26, 1998, Dubow and his company moved to dismiss the suit pursuant to Minn. Stat. § 554.02 (1998), which provides for disposal of claims that materially relate to protected acts of public participation. They invoked Minn. Stat. § 554.03, which immunizes from liability non-tortious conduct or speech aimed at procuring favorable government action. AIS raised a separate constitutional challenge to Minn. Stat. § 554.02.
The district court determined that chapter 554 applied, but that Dubow's conduct and speech were not immunized from liability. The district court also ruled that AIS lacked standing for its constitutional challenge. Dubow now appeals the denial of his motion to dismiss. AIS has not appealed the district court's rulings on the applicability of chapter 554 to its lawsuit or its constitutional challenge to the statute.
The Minnesota legislature enacted chapter 554 to protect citizens and organizations from civil suits that chill the exercise of rights of public participation in government, commonly referred to as SLAPP (strategic litigation against public participation) suits. 1994 Minn. Laws ch. 566. "Public participation means speech or lawful conduct that is genuinely aimed in whole or in part at procuring favorable government action." Minn. Stat. § 554.01, subd. 6 (1998). The filing of a motion to dismiss a claim that materially relates to an act involving public participation suspends discovery in the lawsuit pending final disposition of the motion. Minn. Stat. § 554.02, subd. 2(1). The district court must grant the motion to dismiss unless the respondents prove, by clear and convincing evidence that the moving party's conduct is not immune from liability because the conduct constitutes a tort. Minn. Stat. §§ 554.02, subd. 2(2), (3), 554.03.
This court reviews the denial of a motion to dismiss under Minn. Stat. § 554.02 (1998) de novo. See Special Force Ministries v. WCCO Television, 584 N.W.2d 789, 792 (Minn. App. 1998) (determining whether the non-moving party met its required burden under Minn. Stat. §554.02, subd. 2(2), (3)). Under Minn. Stat. § 554.02, a non-moving party meets its burden of proof if it presents "clear and convincing evidence on the elements of [its] claim." Special Forces, 584 N.W.2d at 792. "Clear and convincing" is proof that shows with reasonable certainty the truth of the ultimate fact in controversy. Black's Law Dictionary 251 (6th ed. 1990).
The elements of a private plaintiff's defamation claim are (1) communication of an alleged defamatory statement to someone other than the plaintiff; (2) falsity of the communicated statement; and (3) a showing that the statement tends to harm the plaintiff's reputation and to lower him or her in the community's estimation. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). Unlike a private plaintiff, a public figure must also prove that the defamatory statement was made with "actual malice" that is, with knowledge that it was false or with reckless disregard for whether it was false or not. Jadwin v. Minneapolis Star & Tribune Co., 390 N.W.2d 437, 440 (Minn. App. 1986). Whether AIS and John Isaacs are public or private figures is a threshold legal issue, which this court reviews de novo. Jadwin v. Minneapolis Star & Tribune Co., 367 N.W.2d 476, 480, 483 (Minn. 1985).
There are three types of public figures: (1) "involuntary" public figures, which are exceedingly rare; (2) general purpose public figures, such as a celebrities or prominent social figures; and (3) limited purpose public figures, who attain their position by thrusting themselves into the vortex of a public controversy to influence its outcome. Jadwin, 367 N.W.2d at 483-84 (noting that the latter two categories attain public figure status by inviting attention and comment). The test for whether a person is a limited purpose public figure is (a) the existence of a public controversy, (b) the person's purposeful or prominent role in the controversy, and (c) a relation between the allegedly defamatory statement and the public controversy. Hunter v. Hartman, 545 N.W.2d 699, 704 (Minn. App. 1996).
In Jadwin, the supreme court held that business activities attracting media attention did not transform a businessperson into a limited purpose public figure. 367 N.W.2d at 485-86. The court emphasized that the businessperson was a professional known within his particular field, who had momentarily caught the attention of the press and public. Id. The court declined to impose public figure status on the businessperson because he had neither impliedly consented to public exposure by thrusting himself into the public arena nor sought to resolve a public controversy that existed prior to the defendant's defamatory actions. Id. The court refused, however, to extend that protection to the corporate plaintiff, which had subjected itself to public scrutiny by sending out press releases and engaging in public securities offerings. Id. at 486, 488.
Like the private individual in Jadwin, Isaacs is a businessperson who did not invite public exposure by injecting his views regarding AIS's metal shredder installation into the public forum, even after the public controversy arose. AIS similarly did not thrust itself into the public controversy over its installation of a shredder in St. Cloud. While AIS plays a prominent role in the controversy, the record before us does not indicate that the public controversy existed prior to publication of Dubow's letter. We therefore conclude that AIS and Isaacs are not limited purpose public figures for purposes of this defamation suit.
We next address whether AIS and Isaacs have presented clear and convincing evidence on the three elements of their defamation claim. In their amended complaint, AIS and Isaacs assert that the following five statements are defamatory.
1. American Iron has told our city planners that they will only shred clean steel, but the owner of Midway Iron has been quoted, as saying crushed cars will soon follow.
2. American Iron is not to be trusted!
3. They have a history dating back 40 years of corruption and legal violations.
4. Two of the owners of American Iron have spent time in prison for theft (from the city of Minneapolis) and tax evasion.
5. They [two of the owners] have been linked to potentially beneficial political contributions.
All of these statements were communicated to residents in a two zip-code area. Statement four is defamatory per se. Richie v. Paramount Pictures Corp., 544 N.W.2d 21, 25 n.3, (Minn. 1996) (statements falsely impugning criminal activity are defamatory per se and harm to reputation is presumed); Stuempges, 297 N.W.2d at 255 (slander affecting the plaintiff in his business is defamatory per se). Consequently, to survive a motion to dismiss, AIS and Isaacs must prove, by clear and convincing evidence, that the statement is false.
The owners of American Iron are John Isaacs and his father, Fred Isaacs. According to John Isaacs's affidavit, he has never been involved in any criminal matter
(with the exception of traffic violations) and never spent time in prison for theft from the City of Minneapolis or tax evasion. The affidavit admits that Fred Isaacs and Harry Isaacs, his grandfather and former AIS owner, were convicted of crimes in the 1950's, but the crimes did not include theft.
The six newspaper articles cited by Dubow support Isaacs's affidavit. The first article discusses Fred and Harry Isaacs's federal convictions and prison terms for fraud in the disposal of scrap rails and streetcars in the 1950's. The article reveals that Fred Isaacs was pardoned by President Ford in 1976. The other articles discuss this same incident, clearly identifying (several times in the headline) that the prison term was for a fraud conviction. None of the articles mentions theft, much less theft from the City of Minneapolis. One article mentions that Harry and Fred Isaacs were arrested on a related tax evasion charge, but does not state that they were convicted or spent time in prison on that charge.
Nevertheless, a plaintiff cannot prove falsity by "showing only that the statement is not literally true in every detail. If the statement is true in substance, inaccuracies of expression or detail are immaterial." Jadwin, 390 N.W.2d at 441. A statement is substantially accurate if "its gist or sting is true, that is, if it produces the same effect on the mind of the recipient which the precise truth would have produced." Id. If any reasonable person could find the statement to be a "supportable interpretation" of its subject, the statement is not defamatory. Hunter, 545 N.W.2d at 707. In determining whether a statement is a supportable interpretation, courts consider the context in which the statement was made. Id.
The allegedly defamatory statement was made in the context of questioning whether the City of St. Cloud should trust AIS and its owners and approve their entry into the St. Cloud business community. The precise truth behind Dubow's statement is that one current and one former AIS owner spent time in prison after being convicted for fraud nearly 40 years ago. Dubow's interpretation - that two of the owners of AIS spent time in prison for theft from the City of Minneapolis - produces a different effect on the mind of a recipient considering whether the City of St. Cloud should presently trust AIS and its current owners. We conclude that respondents have met their burden of proving that Dubow's statement is substantially false.
Dubow contends the district court should have considered his assertion of qualified privilege when determining whether respondents sufficiently proved the elements of their defamation claim. Once the defendant has demonstrated the existence of a qualified or conditional privilege, the burden shifts to the plaintiff to prove that the privilege has been abused by showing actual malice. Stuempges, 297 N.W.2d at 256-57. Although a jury generally determines whether defendant abused its privilege, a court need not submit the issue to a jury when "the totality of the evidence does not support a finding of malice." Harvet v. Unity Medical Ctr., Inc., 428 N.W.2d 574, 579 (Minn. App. 1988). The totality of the evidence standard requires that the plaintiff have the benefit of discovery before attempting to meet its burden. We conclude that the district court did not err in declining to rule on qualified privilege at the early dismissal stage.
Tortious Interference with Contract and Prospective Business Advantage
Respondents did not address this second tort claim in their opposition to the motion to dismiss. This court is left only with the amended complaint, which does not set out clear and convincing evidence that Dubow's conduct constituted a tort. First, tortious interference with contract and tortious interference with prospective advantage are two separate torts, each with their own elements. Wild v. Rarig, 234 N.W.2d 775, 790-91 n.16 (Minn. 1975). More importantly, when the same defamation forms the basis of both a tortious interference and defamation claim, the tortious interference claim is encompassed by the defamation claim. Id. at 793. Hence, respondents cannot sustain their separate tortious interference claims.
We affirm the district court's denial of the motion to dismiss with respect to the defamation claim, but reverse as to the tortious interference of contract and prospective business advantage claim.
Affirmed in part and reversed in part.
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 AIS has not adequately shown that the other statements are defamatory. Statement two is an opinion, which is not actionable. Hunter, 545 N.W.2d at 706 (expressions of opinion are not actionable if, in the context, the audience understands that the statement is not a representation of fact). Statements three and five, which are somewhat ambiguous, are "substantially true", as evidenced by several newspapers articles. AIS did not seriously challenge statement one in its opposition to the motion to dismiss.
 According to newspaper accounts, the Twin City Rapid Transit Co. (TCRT) was in charge of disposing of streetcars and rails when the Twin Cities converted from streetcars to buses in the 1950s. TCRT sold the scrap rails and streetcars to AIS at below market prices. Several TCRT officers were convicted of fraud along with Fred and Harry Isaacs.