Nelson Auto Center, Inc. v. Multimedia Holdings Corporation
- Donovan Frank
- 0:17-cv-05577
- U.S. District Court · District of Minnesota
- 10
In Nelson Auto Center v. Multimedia Holdings, Judge Frank granted dismissal and dismissed Nelson Auto’s defamation complaint with prejudice.
Nelson Auto Center’s defamation claim was dismissed with prejudice, and Multimedia Holdings Corporation, KARE-TV/KARE 11, and Tegna, Inc. obtained dismissal of the lawsuit.
What happened
Nelson Auto Center, Inc. v. Multimedia Holdings Corporation concerned news reports about criminal charges against Nelson Auto’s former fleet manager and an alleged overbilling scheme involving police-vehicle purchases. Nelson Auto claimed the reports falsely suggested that the dealership itself faced criminal charges.
Nelson Auto argued that KARE 11 knew the reports were false or recklessly disregarded their truth. The defendants argued that the complaint did not plausibly allege the required level of fault for a corporation suing a media defendant. The court considered the reports’ headlines, Facebook post, correction, and later hyperlink.
Judge Donovan W. Frank ruled that Nelson Auto, as a corporation suing a media entity over a matter of public interest, had to allege “actual malice”—knowledge of falsity or reckless disregard for truth. The court found the allegations insufficient, granted the defendants’ motion to dismiss, and dismissed the amended complaint with prejudice.
The detailed version
- Nelson Auto Center, Inc. v. Multimedia Holdings Corporation · No. 0:17-cv-05577
- Donovan Frank
- Sept. 12, 2018
Background
Nelson Auto sued Multimedia Holdings Corporation, doing business as KARE-TV and KARE 11, and Tegna, Inc., alleging defamation based on KARE 11 reports published in July, November, and December 2017. The reports concerned an alleged overbilling scheme involving Nelson Auto’s former fleet manager, Gerald Worner, who was charged with five counts of theft by swindle.
The July 24, 2017, report used the headline “KARE 11 Investigates: Criminal Charges Filed Against State Vendor.” Its Facebook post stated that a state vendor faced criminal swindling charges after a KARE 11 investigation. The story’s sub-headline said that charges had been filed against the former fleet manager at Nelson Auto. Nelson Auto alleged that the reports falsely claimed or implied that criminal charges had been brought against the dealership.
After the Nelsons told KARE 11 that the reports were false, KARE 11 changed the headline to refer to a “former manager” and added a correction stating that the charges involved the former manager, not the dealership. Nelson Auto alleged that KARE 11 did not correct the Facebook post, that a later story linked to the July report, and that the December story misleadingly suggested that the dealership owners had ignored warnings about the scheme. The December story also stated that the owners had not been charged.
Legal standard
The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court assumed the complaint’s factual allegations were true and viewed reasonable inferences in Nelson Auto’s favor, but it did not accept conclusory statements or unsupported legal conclusions.
To survive dismissal, the complaint needed enough factual detail to make the claim plausible rather than merely possible. Under Minnesota law, a defamation claim requires a false and defamatory statement, publication to a third party, and harm to reputation.
Corporation’s public-figure status
The court held that, when a corporation brings a defamation claim against a media defendant, the corporation must allege actual malice. Actual malice means that the defendant made the statement knowing it was false or while recklessly disregarding whether it was true or false. Reckless disregard requires facts showing that the speaker had serious doubts about the statement’s truth; ill will or spite alone is not enough.
The court rejected Nelson Auto’s argument that smaller corporations or corporations in less-regulated industries should receive an exception. It concluded that Minnesota law treats a corporate plaintiff as a public figure for this type of defamation claim. The court also concluded that the reporting involved a matter of legitimate public interest because it concerned alleged overbilling involving public funds and a public procurement process. The court noted that the alleged scheme resulted in a known loss of $379,722 in taxpayer money between October 2014 and March 2017.
Actual malice
The court found that Nelson Auto had not plausibly alleged actual malice. Regarding the word “vendor,” the court noted that the body of the July report identified Worner—not Nelson Auto—as the person charged. The court found no allegations or incorporated materials suggesting that KARE 11 intentionally or recklessly used “vendor” falsely in the headlines.
The court also found that the Facebook post did not support an actual-malice finding because it expressly stated that Nelson Auto’s former fleet manager was facing the charges. As to the hyperlink in the November story, the court characterized the alleged failure to remove or correct the link as an oversight, not facts showing that KARE 11 knew the linked material was false or recklessly disregarded its truth.
Disposition
The court concluded that Nelson Auto had failed to allege facts supporting actual malice and that its defamation claim therefore failed. It granted the defendants’ motion to dismiss and dismissed Nelson Auto’s amended complaint with prejudice. The court directed that judgment be entered accordingly.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.