J. Zutz v. Nelson .

788 N.W.2d 58

Loren J. ZUTZ, et al., Appellants,

v.John NELSON, et al., Respondents.

No. A08-1764.

Supreme Court of Minnesota.

Sept. 9, 2010.

Syllabus by the Court

Watershed district board members are protected by a qualified privilege against defamation suits for statements made when board members are performing a legislative function on behalf of the district.

Paul A. Sortland, Sortland Law Office, Minneapolis, MN, for appellants.

Lindsay G. Arthur, Jr., Beth Jenson Prouty, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, MN, for respondents.

OPINION

ANDERSON, G. BARRY, Justice.

This case involves the level of privilege from defamation liability applicable to subordinate government bodies such as watershed district boards. All four parties are board members of the Middle Snake Tamarac Rivers Watershed District in northwestern Minnesota. While serving as board members, Loren J. Zutz and Elden J. Elseth conducted an investigation regarding alleged improprieties in the watershed district's payroll practices. Fellow board members John Nelson and Arlyn Stroble believed that the actions of Zutz and Elseth were inappropriate and in violation of the law. Both Nelson and Stroble allegedly made statements to that effect at a 2007 watershed district meeting, and Zutz and Elseth then brought this action against Nelson and Stroble for defamation. The Marshall County District Court granted Nelson and Stroble's motion for judgment on the pleadings, holding that as board members, they were protected by an absolute legislative privilege. Zutz and Elseth appealed, and the court of appeals affirmed in an unpublished decision. Zutz v. Nelson, No. A08-1764, 2009 WL 1752139 (Minn.App. June 23, 2009). Because we hold that members of watershed district boards are entitled to only a qualified, rather than an absolute, privilege, we reverse and remand.

A watershed district is a special-purpose unit of local government created by statute “[t]o conserve the natural resources of the state by land use planning, flood control, and other conservation projects.” Minn.Stat. § 103D.201, subd. 1 (2008). Watershed districts are established for various specific purposes serving those ultimate goals, including controlling flood waters, diverting watercourses, providing and conserving water supply, regulating the use of ditches and watercourses, regulating improvements by riparian property owners, and providing hydroelectric power, among others. Minn.Stat. § 103D.201, subd. 2 (2008). Watershed districts have extensive authority at their disposal in order to accomplish these goals. For example, districts may acquire dams, dikes, reservoirs, water supply systems, and real and personal property by exercising the power of eminent domain or by other means. Minn.Stat. § 103D.335, subds. 1(3), 9, 11 (2008).

Each watershed district in Minnesota is operated by a board of managers. The county commissioners of the counties served by the watershed district appoint the managers, who serve three-year terms. Minn.Stat. §§ 103D.311, subd. 2, 103D.315, subd. 6 (2008). Board members of watershed districts take an oath that applies to Executive Department officers, Minn.Stat. § 103D.315, subd. 1 (2008), but also act in a quasi-legislative capacity. The Middle Snake Tamarac Rivers Watershed District's board has seven members, six of whom are appointed by the Marshall County commissioners. The seventh member is appointed by the Polk County commissioners.

The Middle Snake Tamarac Rivers Watershed District is one of 45 watershed districts in Minnesota. The district is located in northwestern Minnesota, primarily in Marshall County, and covers the natural watershed areas of the Middle, Snake, and Tamarac Rivers. All three rivers are tributaries of the Red River.

Watershed district boards hire employees to facilitate “the works and improvements undertaken by the district.” Minn.Stat. § 103D.325, subd. 3 (2008). In the course of their activities as members of the district's board, plaintiffs Zutz and Elseth became concerned about payments to various district employees. They made inquiries at the district's bank, and obtained certain bank records in response to their inquiries.

At a district board meeting on June 18, 2007, two other board members, defendants Nelson and Stroble, allegedly accused Zutz and Elseth of violating the Minnesota Government Data Practices Act by making inquiries and obtaining the records from the bank. Specifically, in response to a question about whether Zutz and Elseth violated the Minnesota Government Data Practices Act, Zutz and Elseth allege that Nelson stated: “I don't think there is much question that he did.” ¹ Nelson also allegedly said, “Laws are being broken by Board Members-enough is enough!” The implication of that statement was allegedly that Zutz and Elseth had violated Minnesota law. Zutz and Elseth also allege that at the same meeting, Stroble said, “Why should we provide legal counsel for actions that are against the law?” implying that Zutz and Elseth had engaged in unlawful activities.

Zutz and Elseth brought an action against Nelson and Stroble for defamation. Nelson and Stroble raised several affirmative defenses and moved for judgment on the pleadings. The district court granted the motion and dismissed the complaint on the ground that an absolute legislative privilege protected Nelson and Stroble from defamation claims.

Zutz and Elseth appealed, arguing that Minnesota law does not extend absolute privilege to subordinate bodies such as watershed district boards. The court of appeals affirmed the district court's judgment in an unpublished opinion. Zutz v. Nelson, No. A08-1764, 2009 WL 1752139, at *2 (Minn.App. June 23, 2009). We granted review on one legal issue: whether the doctrine of absolute legislative privilege applies to allegedly defamatory statements made by members of a subordinate public body, such as the board of the Middle Snake Tamarac Rivers Watershed District.

The district court granted Nelson and Stroble's motion for judgment on the pleadings under Minnesota Rule of Civil Procedure 12.03 and dismissed Zutz and Elseth's complaint. We have said that “[j]udgment on the pleadings is proper where the defendant relies on an affirmative defense or counterclaim which does not raise material issues of fact.” Jacobson v. Rauenhorst Corp., 301 Minn. 202, 206, 221 N.W.2d 703, 706 (1974), overruled on other grounds by Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc., 281 N.W.2d 838 (Minn.1979). On appeal from such a dismissal, we consider only the facts alleged in the complaint, accepting those facts as true and drawing all reasonable inferences in favor of the nonmoving party. Hoffman v. N. States Power Co., 764 N.W.2d 34, 45 (Minn.2009). We review de novo whether “the complaint sets forth a legally sufficient claim for relief.” Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn.2003).

Two categories of privilege exist as defenses against defamation claims-absolute privilege and conditional or “qualified” privilege. Both types of privilege are broadly recognized across the United States, and generally “result[ ] from the court's determination that statements made in particular contexts or on certain occasions should be encouraged despite the risk that the statements might be defamatory.” Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d 876, 889 (Minn.1986). The Restatement (Second) of Torts explains that absolute and qualified privileges are both “based upon a policy that treats the ends to be gained by permitting defamatory statements as outweighing the harm that may be done to the reputation of others.” Restatement (Second) of Torts ch. 25, topic 2, tit. B Introductory Note, at 242-43 (1977). Absolute and qualified privileges cover statements made by many categories of public officials, and have the purpose of making officials “as free as possible from fear that their actions in [their] position[s] might” subject them to lawsuits for defamation. Id. at 243. An absolute privilege applies without regard to the intent of the speaker, but a qualified privilege requires a determination of the speaker's mental state. We have defined the difference between the two kinds of privileges by stating that “[a]bsolute privilege means that immunity is given even for intentionally false statements, coupled with malice, while a qualified or conditional privilege grants immunity only if the privilege is not abused and defamatory statements are publicized in good faith and without malice.” Matthis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 416 (1954).

Nelson and Stroble argue that their alleged statements should be covered by absolute legislative privilege. Zutz and Elseth assert that Nelson and Stroble may claim the benefit of only a qualified privilege, and therefore may avoid liability for defamatory statements only by showing their good faith and lack of malice. See Matthis, 243 Minn. at 223, 67 N.W.2d at 416.

Absolute privilege is not lightly granted and applies only in limited circumstances. The Minnesota Constitution grants absolute privilege from defamation liability to members of the State Senate and House of Representatives in the discharge of their official duties. Minn. Const. art. IV, § 10. We have extended this absolute privilege, as a matter of public policy, to some other government officials in certain contexts. E.g., Bauer v. State, 511 N.W.2d 447, 450 (Minn.1994) (acknowledging the extension of absolute privilege to government officials acting in judicial or quasi-judicial capacities); Johnson v. Dirkswager, 315 N.W.2d 215, 223 (Minn.1982) (extending absolute privilege to Commissioner of Public Welfare in the performance of his official duties as a “top-level cabinet-type” official). But we have consistently declined to extend absolute privilege to all government officials. E.g., Bauer, 511 N.W.2d at 450 (declining to extend absolute...