Jadwin v. Minneapolis Star and Tribune Co.

• Citation: 367 N.W.2d 476
• Decision Date: 03 May 1985
• Docket Number: No. C5-82-1519,C5-82-1519
• Parties: , 11 Media L. Rep. 1905 Thomas E. JADWIN, individually, et al., Appellants, v. MINNEAPOLIS STAR AND TRIBUNE COMPANY and Joe Blade, Respondents.
• Court: Supreme Court of Minnesota (US)

Page 476

367 N.W.2d 476

53 USLW 2594, 11 Media L. Rep. 1905

Thomas E. JADWIN, individually, et al., Appellants, v. MINNEAPOLIS STAR AND TRIBUNE COMPANY and Joe Blade, Respondents.

No. C5-82-1519.

Supreme Court of Minnesota.

May 3, 1985.

Syllabus by the Court

1. The determination of whether a defamation plaintiff is a private individual or a public figure is a question of law for the trial court. A reviewing court must independently assess the trial court's finding that plaintiffs are private individuals to determine whether the law has been properly applied.

2. Given the particular facts before the trial court on motion for summary judgment, appellant Jadwin is a private individual for purposes of this libel suit.

3. Given the particular facts before the trial court on motion for summary judgment, corporate appellants are limited purpose public figures for purposes of their libel suits.

4. When a private individual defamation plaintiff brings an action for libel, a negligence standard of fault applies for recovery of actual damages.

Allen D. Barnard Erica C. Street, Minneapolis, for appellant.

Patricia A. Hirl, Norton L. Armour, Minneapolis, for Minneapolis Star and Tribune Co.

Paul R. Hannah, Paula D. Osborn Michael J. Vanselow, St. Paul, for Northwest Publications, Inc. and WCCO-TV, Inc.

Heard, considered and decided by the court en banc.

WAHL, Justice.

Thomas E. Jadwin (Jadwin) and two corporations which he organized, Tax Exempt Bond Fund for Minnesotans, Inc. (Bond Fund) and Minnesota Fund Management, Inc. (MFM), brought this libel suit against the Minneapolis Star and Tribune Company (Star) and Joe Blade (Blade), a reporter for the Star, alleging that they had been libelled in an article written by Blade and published on the front page of the business-financial section of the Star on Wednesday, March 5, 1980. The trial court granted defendants' motion for summary judgment against all three plaintiffs. We affirm in part, reverse in part, and remand.

Jadwin was the promoter, president and principal shareholder of MFM and the president and director of the Bond Fund. He worked from September 1977 to May 14, 1980 to develop the double tax-exempt ¹ Minnesota no-load bond mutual fund for public offering. Jadwin spent significant time incorporating the Bond Fund and MFM with assistance of legal counsel, registering MFM as an investment adviser under federal and state securities law and registering the Bond Fund with federal and state regulators for sale in Minnesota. He also developed a prospectus and supplemental sales literature as allowed under federal and state laws and regulations. In a promotional effort to attract fund investors, Jadwin, as an officer and director of MFM, placed advertisements in newspapers throughout the state of Minnesota offering the fund to the public as an investment. He mailed 13,000 copies of the Bond Fund's prospectus and supplemental sales literature to prospective investors. On behalf of MFM, he also issued a press release to 30 Minnesota newspapers and magazines, including respondent Star, to announce the creation of the Bond Fund. ²

Respondent Blade was the only reporter who requested an interview with Jadwin about the Bond Fund. In preparation for his story, Blade conducted more than 15 interviews, including three separate interviews with a deputy commissioner of securities for Minnesota and two interviews, including a picture session, with Jadwin. Blade reviewed the Bond Fund's public registration file at the Minnesota Department of Commerce, Division of Securities. Blade also investigated the mailing address of the Bond Fund. He discovered that it was the office of Executive Secretary, Ltd., a secretarial and answering service business. The article was finished on March 3, 1980; the business news editor approved the article for publication on Wednesday, March 5, 1980.

The article appeared on the first and second pages of the business-financial section of the newspaper during the impoundment period of the Bond Fund. ³ It was headlined "New City Mutual Fund Stages One-Man Show" and described Jadwin's difficulties in registering the Bond Fund with the Minnesota Securities Division. It described Jadwin as the "single employee" and "sole employee" of the Bond Fund, claiming Jadwin was "soliciting investments in the fund from his apartment." The article also emphasized that Jadwin had twice been asked to withdraw his registration by the Minnesota Securities Division because he lacked mutual fund management experience but that the fund registration was approved after Jadwin met requirements by "agreeing * * * to keep the fund's expenses within legal limits." The article projected initial fund expenses would "bump up against Minnesota's 2 percent limit," though, and reduce investor returns.

The article also disputed Jadwin's claim that the fund was unique by asserting that similar funds and similar investments existed. It further claimed Jadwin had written in a letter to the securities division that he had been "appointed by two presidents" to government positions, when actually he had worked in government but was never personally appointed by a president. The article was accompanied by a picture of Jadwin and a picture of the office door of the secretarial and answering service company which served as the Bond Fund's mailing address with a picture of the first page of the Bond Fund's prospectus superimposed upon the door.

Two days after the article appeared, Jadwin, through his attorney, demanded retraction of the entire article in a letter to the president of the Star. The letter alleged the article contained "fake * * * statements" and "intentional omissions" that would harm the business and social reputations of Jadwin and his two companies. Soon thereafter Jadwin sent a second letter describing in detail what Jadwin alleged was false and defamatory about the article. The Star responded with two letters, both stating that the newspaper did not believe a retraction was in order. Thereafter, appellants commenced this action in Hennepin County District Court alleging libel of all three appellants.

Following extensive discovery, the Star moved the district court for summary judgment against all three plaintiffs. The court granted the Star's motion in its entirety. The court analyzed the case in light of New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964) and its progeny, which hold that if the plaintiff is a public official or public figure, an essential element of the plaintiff's claim is clear and convincing proof of actual malice, i.e., that the defendant acted with willful or reckless disregard for the truth or falsity of the matter published. Id., Curtis Publishing Co. v. Butts, 388 U.S. 130, 84 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). When the plaintiff is found to be a private figure, though, the states may impose any fault standard short of strict liability. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). The court found that all three plaintiffs were private figures. Relying on Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) and Standke v. B.E. Darby & Sons, Inc., 291 Minn. 468, 193 N.W.2d 139 (1971), cert. dismissed, 406 U.S. 902, 92 S.Ct. 1608, 31 L.Ed.2d 813 (1972), however, the court held that when the defamatory matter involves an issue of public concern, even a private plaintiff must prove actual malice. Reading the article in light of the depositions, affidavits, answers to interrogatories and admissions, the court concluded that the plaintiffs had provided no factual support for actual malice, and entered summary judgment. ⁴ This appeal followed.

I.

The first issue we must determine, and a crucial one, is whether the trial court erred in finding Jadwin and his corporate entities private figures for the purposes of this libel suit. If the trial court erred, the actual malice standard applies. If any of the plaintiffs are private figures, we are free to determine whether actual malice or a lesser standard of fault applies. We, thus, confront difficult issues of constitutional law. A brief review of the development of the common law rules and constitutional doctrines regarding libel law provides a context for our inquiry.

The law of libel originated to promote certain interests of the state by means antipathetic to values central to our First Amendment guarantees. Historically, libel was primarily a criminal offense, making punishable any writing tending to bring into disrepute the state, established religion, or any individual likely to be provoked into a breach of the peace because of the words. Truth was no defense to a criminal charge. See Curtis Publishing Co. v. Butts, 388 U.S. 130, 151, 87 S.Ct. 1975, 1989, 18 L.Ed.2d 1094 (1967). See generally Veeder, The History and Theory of the Law of Defamation, 3 Colum.L.Rev. 546 (1903) (part 1), 4 Col.L.Rev. 33 (1904) (part 2). Libel law has since changed substantially, as the "direct consequence of the friction between it * * * and the highly cherished right of free speech." State v. Browne, 86 N.J.Super. 217, 228, 206 A.2d 591, 597 (1965) (citations omitted). Civil remedies became preferred, and the interests protected by the tort shifted to personal, reputational concerns. While allegedly defamatory statements were presumed false, truth was a defense. See Thompson v. Pioneer Press Co., 37 Minn. 285, 294, 33 N.W. 856, 861-62 (1887); Palmer v. Smith, 21 Minn. 419, 420-21 (1875). Most importantly, a balance was negotiated between protecting personal reputation and the competing social interest in unrestricted communication by a complex overlay of legal rules governing the elements of the prima facie case, defenses, and shifting burdens of persuasion.

By its common law, Minnesota imposed strict liability for libel, see Wild v. Rarig, 302 Minn. 419, 446, 234 N.W.2d 775, 792 (1975), following the English...