Stepnes v. Ritschel

Decision Date12 January 2011
Docket NumberCivil No. 08–5296 ADM/JJK.
Citation771 F.Supp.2d 1019,39 Media L. Rep. 1429
PartiesPaul C. STEPNES, Plaintiff,v.Peter RITSCHEL, individual capacity; Jane Moore, individual capacity; City of Minneapolis; CBS Broadcasting, Inc., foreign corporation; and Esme Murphy, individual; Defendants.
CourtU.S. District Court — District of Minnesota


Jill Clark, Esq., Jill Clark, PA, Golden Valley, MN, on behalf of Plaintiffs.James Anthony Moore, Esq., and Sara J. Lathrop, Esq., Assistant Minneapolis City Attorneys, Minneapolis, MN, on behalf of Defendants Peter Ritschel, Jane Moore, and City of Minneapolis.Jeanette Melendez–Bead, Esq., Michael D. Sullivan, Esq., and Chad R. Bowman, Esq., Levine Sullivan Koch & Schulz, LLP, Washington, D.C.; John P. Borger, Esq., and Mary Andreleita Walker, Esq., Faegre & Benson, LLP, Minneapolis, MN, on behalf of Defendants CBS Broadcasting Inc., and Esme Murphy.


On October 20, 2010, the undersigned United States District Judge heard oral argument on Plaintiff Paul C. Stepnes' (“Stepnes”) Motion for Partial Summary Judgment [Docket No. 309], Defendants Peter Ritschel and City of Minneapolis' (collectively, City Defendants) Motion for Summary Judgment [Docket No. 312], and Defendants CBS Broadcasting, Inc. and Esme Murphy's (Murphy) (collectively, “CBS Defendants) Motion for Summary Judgment [Docket No. 315]. For the reasons set forth below, the City Defendants and CBS Defendants' motions are granted. Plaintiff Stepnes's motion is denied.


In an effort to redeem a house he built called the Irving House,” Stepnes, a real estate developer, devised a “home giveaway” contest. Shortly after the contest began in May 2008, Sergeant Peter Ritschel (Ritschel) of the Minneapolis Police Department (“MPD”) arrested Stepnes for illegal gambling and searched the Irving House for evidence of an unlawful lottery. On July 15, 2008, the CBS Defendants aired a newscast that reported on the home giveaway contest and Stepnes's arrest for gambling law violations.

Stepnes has advanced multiple claims against the City Defendants 2 under 42 U.S.C. § 1983 for failure to conduct a non-neutral investigation, false arrest, excessive force, illegal search and seizure, and conspiracy to violate Stepnes's constitutional rights. Additionally, Stepnes has brought a defamation claim against the CBS Defendants, alleging that the broadcast included numerous defamatory statements and that the overall broadcast portrayed Stepnes as a criminal.

A. Irving House

Stepnes is a real estate developer who purchases, restores and resells homes. 1st Am. Compl. (“Compl.”) [Docket No. 2] ¶ 10; Sullivan Decl. [Docket No. 321] Ex. 1 (“Stepnes Dep.”) at 34–35. Stepnes built a “new old home,” equipped with modern amenities yet architecturally designed to blend with the older homes in the neighborhood, at 2857 Irving Avenue South in Minneapolis, Minnesota (the Irving House). Compl. at ¶ 10–11. Stepnes financed the Irving House through a number of loans. Compl. at ¶ 8; Sullivan Decl. Ex. 2 (“1st Stepnes Aff.”) ¶ 9. He attempted to sell the Irving House in 2005 for $2,250,000. 1st Stepnes Aff. ¶ 7. Stepnes declined a purchase offer of $1.8 million. Compl. ¶ 12. Ultimately, he was unable to sell the Irving House for its sought-after price, and the house went into foreclosure. Compl. ¶¶ 12–13; Sullivan Decl. Ex. 7 at 2.

B. Contest 1

In an effort to raise money to redeem the Irving House and pay creditors, Stepnes designed a “Big Dream House Giveaway” contest. Compl. ¶¶ 15, 18–25; Clark Decl. [Docket No. 327] Ex. 22. A website promoting the contest stated that a goal of the contest was to aid the homeless by paying off the mortgage of a shelter for homeless women and children. Compl. ¶ 18; Clark Decl. Ex. 22.

The contest rules provided that contestants pay $20 for an opportunity to guess the number of nails, bolts, and screws (collectively, “fasteners”) contained in a large antique chest (“Contest 1”). Compl. ¶ 25; Moore Decl. [Docket No. 324] Ex. 1 at 2. Stepnes sought to collect $5 million in entry fees. Compl. ¶ 26. The contestant guessing the closest number of items in the chest without going over would be the winner of the contest. Moore Decl. Ex. 1 at 2. If over 250,000 entries were sold, the winner could choose either the Irving House or $1 million. Moore Decl., Ex. 1 at 7. If less than 250,000 entries were sold, the winner was entitled to 50% of “the balance of the funds left after paying all prizes, all contest expenses, and all expenses for the [Irving] House.” Id. Contest 1 also included weekly drawings “for an additional prize.” Id. at 1. If the contest did not result in sufficient income to redeem the Irving House by the redemption date, Stepnes alleges he had arranged for an anonymous benefactor to “to step in.” Compl. ¶ 15.

In April 2008, prior to launching Contest 1, Stepnes sought advice regarding state gambling regulations from Tom Barrett, the Executive Director of the Minnesota Gambling Control Board (“MGCB”). Compl. ¶ 22; Moore Decl. Ex. 6 (“Stepnes Dep.”) at 249–52; Id. Ex. 11 (“Barrett Dep.”) at 70–72. At the meeting, Barrett explained to Stepnes that Minnesota law defines gambling as the presence of three elements: consideration, chance, and a prize. Compl. ¶ 22. Barrett advised Stepnes that “one way to remove the element of ‘chance’ was to host a game of skill.” Id. He told Stepnes that because a guessing contest requires analytical skill, the element of chance is removed from the contest. Barrett Dep. at 27–31. Barrett “gave the green light to the concept of having a container filled with nuts and bolts to be used as the determining factor” in the contest. Id. at 84–85. Stepnes did not request and did not receive a formal written opinion from Barrett. Compl. ¶ 22; Barrett Dep. at 84. Stepnes recalls informing Barrett that the contest would include a weekly drawing for a prize, but that no consideration would be required to enter the weekly drawing. Stepnes Dep. at 251–52. Barrett does not recall discussing a weekly drawing and remembers being surprised to learn after the meeting that Contest 1 included a drawing. Barrett Dep. at 32–33.

Stepnes implemented Contest 1 by borrowing an antique chest and filling it with different nuts, bolts, screws, nails, and other fasteners. Stepnes Dep. at 80–84. Before pouring the hardware into the chest, he placed a plastic drop cloth into the chest to protect it from damage. Stepnes Dep. at 85; Moore Decl. Ex. 12 (“Kwiecien Dep.”) at 24–25. To stabilize and disburse its contents, Stepnes placed a cardboard box into the middle of the chest, underneath the plastic. Stepnes Dep. at 85–86; Kwiecien Dep. at 25. The cardboard box was larger than a shoe box and was partially filled with spools of nails. Stepnes Dep. at 85–86; Kwiecien Dep. at 25. Stepnes did not count the number of items he poured into the chest. Moore Supplemental Decl. Ex. 4 (Clark Supplemental Aff.) at 1–2.

Stepnes promoted Contest 1 by: hiring a media consultant, purchasing advertising, seeking media coverage, hiring a website designer to create a website, posting a sign in the Irving House yard advertising Contest 1, and posting a sign on the door of the Irving House that stated:






Sullivan Decl. Ex. 21; Moore Decl. Ex. 14 (“Aberman Dep.”) at 14; Stepnes Dep. at 51.

The contest website provided a photograph of the antique chest filled with items, and described “the box measurements of the chest containing the materials” as “39 1/2? wide by 15? deep and 12? high ... There is a wide variety of nails, bolts, nuts, washers and screws ranging from ... spikes down to small finishing brads. You must use your skills of analysis and mathematics to determine the number of items in the chest.” Moore Decl. Ex. 1 at 2–3. The description did not mention that a box and plastic sheet were also inside the trunk. See generally id.

The website also advertised the Chester House Foundation's goal of raising $1.5 million “to pay off the mortgage of a shelter for homeless women and children.” Sullivan Decl. Ex. 22. The website does not inform visitors that the $1.8 million dollar home is in foreclosure. Id. The Chester House Foundation is not a registered nonprofit entity or business organization in Minnesota. Pl.'s Mem. of Law in Supp. of Summ. J. [Docket No. 326] at 18; Pl.'s Mem. of Law in Opp. to Summ. J. [Docket No. 346] at 6. Stepnes states that he formed Chester House Foundation as a sole proprietorship, and thus no formal organizational filing was required. Pl.'s Mem. of Law in Opp. to Summ. J. at 6.

C. Arrest

On May 28, 2008, a citizen telephoned Ritschel and told him Stepnes may be conducting an illegal raffle. Moore Decl. Ex. 15 (“Ritschel Dep.”) at 9, 15–16, 19. In response to the phone call, Ritschel reviewed the contest website and printed several pages, including photographs of the antique chest, information about the Chester House Foundation, a description and photos of the Irving House, and the contest rules. Id. at 19–20, 23–24, 33–34. The contest rules and regulations stated that [e]arly entry purchases will be included in up to six weekly drawings.” Moore Decl. Ex. 1 at 19. The website stated that a contestant had been awarded a microwave oven as a prize from the weekly drawing. Ritschel Dep. at 24. Based on his review of the website, Ritschel “determined that at least half of the contest was a weekly drawing that had no skill connected to it.” Id. at 29.

Later that morning, Ritschel, accompanied by Sergeant Emberley, went to the Irving...

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