Chafoulias v. Peterson, No. C2-01-1617.

• Citation: 668 N.W.2d 642
• Decision Date: 14 August 2003
• Docket Number: No. C2-01-1617.
• Parties: Gus A. CHAFOULIAS, Appellant, v. Lori C. PETERSON, Respondent, American Broadcasting Companies, Inc., a Delaware corporation, Respondent.
• Court: Supreme Court of Minnesota (US)

668 N.W.2d 642

Gus A. CHAFOULIAS, Appellant, v. Lori C. PETERSON, Respondent, American Broadcasting Companies, Inc., a Delaware corporation, Respondent.

No. C2-01-1617.

Supreme Court of Minnesota.

August 14, 2003.

Rehearing Granted September 17, 2003.

Michael Berens, Erik K. Fogarty Lisle, Kelly & Berens, P.A., Minneapolis, MN, for Appellant, Gus A. Chafoulias.

Kay Nord Hunt, Phillip A. Cole, Laura A. Enga, Lommen, Nelson, Cole & Stageberg, P.A., Minneapolis, MN, for Respondent, Lori C. Peterson.

Thomas Tinkham, Dean C. Eyler, Dorsey & Whitney LLP, Minneapolis, MN; and Nathan E. Siegel, ABC, INC., Washington, DC, for Respondent, American Broadcasting Companies, Inc.

John P. Borger, Erik E. Jorstad, Patricia R. Stembridge, Faegre & Benson LLP, Minneapolis, for amici Star Tribune, Associated Press, Minnesota Public Radio, and the Business Journal of Minneapolis/St. Paul.

Terrance W. Moore, Steingart, McGrath & Moore LLC, Edina, for amicus Minnesota Broadcasters Ass'n.

Mark R. Anfinson, Minneapolis, for amicus Minnesota Newspaper Ass'n.

Heard, considered, and decided by the court en banc.

OPINION

HANSON, Justice.

Appellant Gus A. Chafoulias brings this defamation action against respondent media company ABC, Inc., and respondent attorney Lori C. Peterson, alleging that ABC published a defamatory statement made by Peterson. We review the decision of the district court, affirmed by the court of appeals, that Chafoulias was a limited purpose public figure on the date of the publication and that respondents are therefore entitled to summary judgment because a reasonable jury could not conclude by clear and convincing evidence that either ABC or Peterson acted with actual malice. We affirm as to ABC but reverse and remand as to Peterson.

Chafoulias is a Rochester businessman and community leader who has achieved success as a local real estate developer. Chafoulias' development projects include the Radisson Plaza Hotel, a 212-room hotel that employs about 185 people. Because of the hotel's proximity to the internationally recognized Mayo Clinic, the Radisson regularly hosts both national and international guests. Chafoulias claims that he was not actively involved in the management of the Radisson. Activities at the hotel provide the context for the allegedly defamatory statement made by Peterson.

Between 1993 and 1995, five female Radisson employees complained to Radisson management that they were being subjected to sexual harassment and aggression by certain male Arab hotel guests. The five women scheduled a meeting with Chafoulias on May 17, 1995, to talk about their concerns, but the meeting was cancelled. The women eventually quit.

After the cancelled meeting, the hotel retained a law firm to investigate the allegations of harassment. The law firm conducted an investigation and concluded that many of the women's complaints were well founded and that Radisson management was aware that a problem existed with regard to the treatment of women by some Arab guests. The law firm recommended that the hotel hire a public relations firm to provide a media strategy and that the hotel prepare a written policy describing unacceptable guest conduct and a written anti-harassment policy for employees "which clearly states that the hotel will not tolerate harassment by guests, and sets forth the procedures available to employees who have complaints regarding improper conduct by guests."

In mid-1995, the five former employees retained Peterson to pursue federal sexual harassment claims against Chafoulias. On August 1, 1995, Peterson wrote Chafoulias that she had been retained by the women, that the women were alleging sexual misconduct in the workplace by some guests, and that "[a]t this point we are considering all appropriate measures to remedy the circumstances brought about by * * * your managers' lack of care and judgment in response to such misconduct."

The hotel agreed to mediate Peterson's threatened claims on April 23, 1996. Several days before the scheduled mediation, Peterson distributed "Wanted" posters at public locations in Rochester. The posters featured pictures of two Arab men, identified by name, stated "$1,000 REWARD for the apprehension of these men" and asked, "Have you been sexually harassed or assaulted by an Arab man? Do you know someone who has?" The "Wanted" posters contained this legend at the bottom: "If you have any information, please contact us at: Lori Peterson & Associates." There is evidence that Peterson attempted to have the "Wanted" posters published by the Rochester Post-Bulletin as an advertisement, but the Post-Bulletin declined because questions asked in the posters "may be perceived as racist."

On April 30, 1996, Twin Cities television station KSTP broadcast the first part of a two-part series, titled "Justice For All," on the issue of alleged sexual harassment of Rochester women by Arab men. The series alleged that several women had been subjected to sexual harassment and abuse by Arab visitors to Rochester and that little had been done by authorities to arrest and prosecute the offenders. That same day, the Rochester Post-Bulletin carried a story headlined "Women claim harassment by Arab men" which quoted Peterson talking about the federal lawsuit. Two other related articles—"Cultural clash can produce problems" and "Attorney built reputation on high-profile harassment cases"—also ran in the April 30, 1996, edition of the Rochester Post-Bulletin.

Media coverage continued in May. On May 2, 1996, the Rochester Post-Bulletin published an article titled "Authorities focus on all assaults against women." In this article, a county attorney and police sergeant reacted to the KSTP-TV series, admonished readers to focus on "the [general] problem of sexual and physical assault on women," and reported that "criminal charges have been filed against four Arab men in connection with the sexual assaults in Rochester." On May 3, 1996, the Rochester Post-Bulletin published an article titled "Punish those who are guilty, Arabs say," in which members of the Arab community voiced concern that the media's reports of alleged sexual harassment reinforced negative stereotypes.

On June 7, 1996, Peterson filed federal lawsuits on behalf of her clients against Chafoulias.¹ The suits alleged that from 1993 to 1995, the women were subjected to sexual harassment and aggression by male Arab hotel guests; that the harassment included abusive and derogatory language, unwelcome sexual commentaries, physical contacts of a sexual nature and a rape; that Chafoulias, as employer, was responsible for the actions of his managers and employees in ignoring, condoning, and contributing to the illegal acts of the hotel guests; and that Chafoulias himself knew about the offensive conduct but failed to notify the police or take other meaningful action.

The filing of these lawsuits was reported in Minneapolis' Star Tribune newspaper on June 8, 1996. The Radisson Plaza responded to that article by issuing a press release on June 13, 1996, which stated in part:

The Rochester Radisson Plaza Hotel takes allegations of harassment very seriously, and hotel management will not tolerate harassment in any form. The hotel has a rigorous harassment policy in place, and appropriate corrective or disciplinary actions are taken in situations in which the policy is found to have been violated. In addition, the hotel adopted several additional written policies that were distributed to all employees and subsequently discussed in training sessions. The hotel also developed a new policy regarding Radisson's Expectations of Conduct by Guests, which was translated into various languages.

On June 15, 1996, the Rochester Post-Bulletin published an article outlining the Radisson's code of conduct and sexual harassment policy titled "Radisson says it has firm policy on harassment."

About the time the suits were filed, David Page, a producer at ABC, learned about the former employees' lawsuits against Chafoulias in a conversation he initiated with Peterson. Working with Brian Ross, an investigative correspondent, Page began researching the allegations of harassment for a news report. In 1996, Page and Ross traveled once to Texas and twice to Minnesota to interview the federal-lawsuit plaintiffs and other key persons, including Peterson. In their affidavits, Page and Ross state that, after interviewing about 80 people and amassing and reviewing documents, they came to believe that Peterson's allegations were true—that the harassment had occurred and that Chafoulias knew of it.

Page and Ross invited Chafoulias to "present [his] position on this matter in [his] own words" on camera. A letter from Page to Chafoulias dated September 18, 1996, documents that Page spoke with Chafoulias on the telephone in the summer of 1996 and scheduled an on-camera interview that Chafoulias later canceled. In October 1996, when Ross and Page were in Rochester, they and their crew encountered Chafoulias on the street and conducted a brief interview. After the street interview, on June 17, 1997, Page wrote to Chafoulias, again requesting an "in-depth interview." Chafoulias responded to this letter, declining to be interviewed and submitting that "[t]he real story is [Peterson's] familiar tactic" of making threats to go to the press to encourage settlement.

Page produced a story for ABC's program PrimeTime Live entitled "The VIP Floor" which aired on August 6, 1997. Segments of interviews with Peterson and Chafoulias were included in the broadcast. The basis for this defamation case against Peterson and ABC is that Peterson defamed Chafoulias when ABC broadcast her statement that "Chafoulias knew. Chafoulias has known for years that these women were being attacked, harassed, raped."

In mid-May 1998, three weeks after the federal lawsuits were settled, Rochester television station KTTC broadcast an interview of Chafoulias. In an affidavit, Chafoulias...