Opinion
A18-1171
03-11-2019
William DeRosa, Appellant, v. Craig M. McKenzie, Respondent.
John B. Williams (pro hac vice), Williams Lopatto PLLC, Washington, D.C.; and Courtney R. Sebo, Excelsior Law Firm, LLC, Excelsior, Minnesota (for appellant) K. Jon Breyer, Kutak Rock LLP, Minneapolis, Minnesota (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn . Stat. § 480A.08, subd. 3 (2018). Affirmed
Bjorkman, Judge Hennepin County District Court
File No. 27-CV-17-10988 John B. Williams (pro hac vice), Williams Lopatto PLLC, Washington, D.C.; and Courtney R. Sebo, Excelsior Law Firm, LLC, Excelsior, Minnesota (for appellant) K. Jon Breyer, Kutak Rock LLP, Minneapolis, Minnesota (for respondent) Considered and decided by Connolly, Presiding Judge; Bjorkman, Judge; and Florey, Judge.
UNPUBLISHED OPINION
BJORKMAN, Judge
Appellant challenges the dismissal of his defamation claim, arguing that the district court erred by determining that the complaint failed to state a claim upon which relief could be granted because it did not allege that respondent chief executive officer (CEO) made the statements contained in a corporate press release. We affirm.
FACTS
In 2014, Lone Star Value Management acquired a substantial equity stake in Dakota Plains Holdings, Inc., an energy transportation company. The two companies executed a non-disclosure agreement prohibiting disclosure of confidential information to third parties but permitting disclosure between the two companies. The companies also agreed that Lone Star could place a nominee on the Dakota Plains board of directors. Lone Star nominated appellant William DeRosa, who joined the board in July 2014.
The appointment was "poorly received" by respondent Craig McKenzie, Dakota Plains' CEO and board chairman. DeRosa requested that the board adhere to proper corporate governance protocols, which McKenzie characterized as "a distraction." And McKenzie accused DeRosa of improperly leaking confidential information to Lone Star's CEO. The board subsequently adopted new bylaws prohibiting the sharing of confidential information with Lone Star. McKenzie then accused DeRosa of violating the new bylaws, and Lone Star asked DeRosa to resign from the Dakota Plains board of directors. He did so on February 13, 2015.
Ten days later, Dakota Plains sued DeRosa in Nevada, alleging that he breached his fiduciary duties to Dakota Plains by disclosing confidential information. DeRosa counterclaimed, and the parties litigated for more than a year. Dakota Plains eventually paid DeRosa $10,000 to settle the action.
In early 2016, while the Nevada action was pending, a proxy battle emerged between Lone Star and Dakota Plains. Lone Star nominated five directors to the board. Dakota Plains responded by issuing a press release in Business Wire, a wire service routinely read by individuals in the financial industry. The press release criticized Lone Star's nominations and stated:
Moreover, after the Company appointed William DeRosa of Lone Star Value to the Board in 2014, Mr. DeRosa subsequently violated his fiduciary duties to all stockholders and committed unlawful acts by sharing material non-public information. Mr. DeRosa resigned from the Board because of this breach of fiduciary duty and will stand trial in court for his actions later this year.Dakota Plains denied DeRosa's request for a retraction, and the press release remains available on the internet.
In July 2017, DeRosa initiated this action against McKenzie, claiming defamation based on "his actions in directing and publishing a press release falsely accusing Mr. DeRosa of 'violating his fiduciary duties' and 'committing unlawful acts'" and asserting a related claim of intentional infliction of emotional distress. McKenzie moved to dismiss the complaint under Minn. R. Civ. P. 12.02(e) for failure to state a claim. The district court granted the motion with prejudice, reasoning that (1) Minnesota law does not support a defamation claim against McKenzie personally "based solely upon allegations that McKenzie, in his position as CEO and Chairman, directed and ultimately authorized issuance of the press release" and (2) DeRosa's dependent emotional-distress claim also fails. But the district court permitted DeRosa to file an amended complaint within 20 days. DeRosa did so, adding allegations that McKenzie "authorized and approved the defamatory publication" and therefore "had control over the publication and is liable, directly and vicariously, for its content under Minnesota law." McKenzie moved to dismiss the amended complaint. The district court granted the motion. DeRosa appeals.
In late 2016, Dakota Plains filed a chapter 11 bankruptcy petition.
DECISION
A district court may dismiss a complaint when the plaintiff fails to state a claim upon which relief can be granted. Minn. R. Civ. P. 12.02(e). On appeal from such a dismissal, we review de novo whether the complaint sets forth a legally sufficient claim for relief. Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014). We take the facts alleged in the complaint as true and draw inferences in favor of the nonmoving party. See Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003); see also N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 490 (Minn. 2004) (stating that a court may also consider documents referenced in the complaint on a rule 12.02 motion to dismiss for failure to state a claim).
To establish defamation, a plaintiff must show that (1) the defendant made a false statement, (2) the defendant communicated the statement to a third party, and (3) the statement harmed the plaintiff's reputation in the community. Weinberger v. Maplewood Review, 668 N.W.2d 667, 673 (Minn. 2003). DeRosa argues his amended complaint sets forth the first element because it alleges that McKenzie "authorized and approved" the press release. We disagree.
DeRosa cites no authority for the proposition that a person is liable for defamation when he authorizes and approves statements made by another. As a factual matter, DeRosa does not allege that McKenzie wrote, dictated, or otherwise generated any of the content of the press release. Nor does he claim that McKenzie authorized and approved the press release as his own statement. Rather, McKenzie authorized and approved the press release on behalf of Dakota Plains—the entity with ultimate responsibility for the press release and to which the press release was expressly attributed. See Janus Capital Grp. v. First Derivative Traders, 564 U.S. 135, 142-43, 131 S. Ct. 2296, 2302 (2011) (reasoning, in the context of an SEC rule, that "the maker of a statement is the person or entity with ultimate authority over the statement," not one "who prepares or publishes a statement on behalf of another," and that attribution within a statement "is strong evidence that a statement was made by—and only by—the party to whom it is attributed").
DeRosa nonetheless urges that one may be liable for another's defamatory speech if he exercised "control" over the speech, citing Friedell v. Blakely Printing Co., 203 N.W. 974 (Minn. 1925). This argument is misplaced. In Friedell, the supreme court relied on general agency principles in holding that a newspaper may be liable for its employee's defamatory speech because of the control it exerts over its employees. 203 N.W. at 977. Friedell may support holding Dakota Plains responsible for the defamatory statement of the unidentified employee who wrote the press release, but it provides no basis for extending liability to a corporate officer such as McKenzie. Indeed, liability can attach to the employee or officer for a corporation's defamatory speech only if he is its author. See Ellingson v. World Amusement Serv. Ass'n, 222 N.W. 335, 339 (Minn. 1928) (stating that an officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor).
In short, taking DeRosa's allegations as true, McKenzie merely reviewed statements that another wrote and authorized and approved their release on behalf of Dakota Plains. Because these facts do not state a claim for relief against McKenzie, the district court did not err by dismissing the amended complaint.
Because DeRosa fails to state an actionable defamation claim, his dependent claim of intentional infliction of emotional distress likewise fails.
Affirmed.