Media Law Minnesota

Are you a union member thinking about suing your boss for writing up a false report about you?  Good luck.  Write your congressman.

This month, the Minnesota Court of Appeals just made it extremely more difficult for employees who are covered by collective bargaining agreements to sue over job-performance reviews, even if the review contains something false.

The case arose at Bethesda Hospital in St. Paul, where a registered nurse got a written warning based on a patient’s complaint that the nurse had failed to administer a prescription drug to a patient.  But it turns out that she had given the drug.  Also,aA month earlier, the nurse had received a verbal warning after a patient accused her of being “short, abrupt, nasty and sharp.”  According to the nurse, that patient was well-known for making false complaints, and she filed a union grievance.

She also went to court, alleging that the Director of Nursing had defamed her.  A trial court threw out the case, and earlier this month the appeals court agreed that the dismissal was proper.  The reason?  Because a federal law, the Labor Management Relations Act, “preempts” state defamation law when—get ready—the “defamation claim is substantially dependent on the interpretation of a provision of the CBA.”  If it’s not “substantially dependent,” then you can sue under state defamation law, saith the appeals court.

Hmm.  This is a toughie.  The Labor Management Relations Act dates to the mid-1940s, and it generally aims to govern relations between union and management nationwide.  Makes sense.  But the federalization of our law is running rampant, something that our nation’s founders would find disturbing.  I am quite confident in saying that early American leaders never dreamed that that an employee could not go to local court to use her boss for defamation.

But times change, and so does the law, and so does the nation.

This week the Eighth Circuit Court of Appeals released a decision demonstrating how tough it can be to invoke defamation law when the person alleging defamation was the one who asked for the allegedly false information in the first place.

The federal case from Minnesota involved a loan dispute between a small business and one of Minnesota’s largest banks.  Court cases were pending in both Hennepin and Ramsey County courts, one involving an alleged $35,000 loan default and the other involved alleged bank overdraft charges.  The business defended against and settled the first lawsuit involving the loan.  But the business did not defend against the second suit involving the overdraft charges, which prompted the bank to seek a default judgment and to begin garnishing the business’ other bank accounts.

Then, in reponse to the business owner’s request, the bank sent a fax suggesting that the $35,000 loan was unpaid.  The business owner filed a defamation case containing a variety of allegations, including that the fax contained false information that was communicated to potential investors and caused the business to lose $4.2 million in profits

The Eighth Circuit rejected the defamation claims one by one.  Most importantly, the court concluded that the fax was “absolutely privileged”–in other words, it could not provide a basis for a defamation claim even if the information was false–because the business owner had consented to it being sent.

A defamation decision from the Minnesota Court of Appeals of a few weeks ago should give online communicators pause.  The decision did not involve web sites, blogs, or other internet-based ways of communicating, but it did involve something that is so easy to do online: rant about a business.

Judging from the name of the case, Diversified Water Diversion, Inc. v. Standard Water Control Systems, Inc., you would be correct to guess that the matter involved Minnesota construction contractors — specifically, contractors that do drain-tile work at homes.  In the court’s words, there was “a great deal of ill will” between the companies, so bad that in 2002 Standard sued Diversified over its business practices.  The parties settled the suit and, as is customary, agreed that neither company would “disparage” the other.

In 2005 and 2006, when some homeowners received bids from both companies, Standard’s president warned the homeowners that Diversified did “terrible work,” would not honor warranties, and was “sleazy.”  Diversified sued Standard for defamation, even though the homeowners had hired Diversified anyway.  The claim was for “defamation per se,” which in Minnesota permits certain persons — chiefly businesspeople people and persons wrongfully accused of crimes — to win defamation suits even when they have failed to prove that they actually have been harmed.

Defamation per se is controversial, and rightly so.  The theory is that some defamation is so bad that the person who was defamed should not have to be burdened with proving that there was damage to reputation.  Falsely accusing someone of being a pedophile is one instance in which Minnesota courts have awarded defamation per se damages.  That makes sense.

But does it make sense to permit a business to recover these sorts of damages?  In Diversified v. Standard, both the Hennepin County trial court and the Minnesota Court of Appeals said yes, to the tune of $30,000.  The appeals court’s written ruling provides only a peek of what went on, but I am troubled that there is no explanation of how Diversified proved that the comments were false – something that is required even for “defamation per se.”  No one deserves to be accused of being “sleazy,” and I am not suggesting that anyone in this case was.  But still, Minnesota’s defamation law cannot be allowed to get so out of control that plaintiffs have to prove neither falsity nor damages.  Maybe falsity was proven in this case, but the appeals court’s unfortunate omission of that issue might mean trouble down the road.

Including for online communicators.  For now, be very, very careful about whining about businesses.  Because in Minnesota, you’re on notice that even true whining might mean trouble.