Appeals court hearing set in Chafoulias case

By Janice Gregorson

The Minnesota Court of Appeals will hear arguments in February on an appeal over a defamation lawsuit brought by Rochester developer Gus Chafoulias.

In June, a district judge dismissed Chafoulias' lawsuit, setting the stage for an appeal his attorney said could go all the way to the Minnesota Supreme Court.

Olmsted District Judge Joseph Wieners dismissed the lawsuit, saying Chafoulias had failed to prove that Minneapolis attorney Lori Peterson acted with actual malice in statements she made on a television report in August 1997.


ABC's "Prime Time Live" aired a story about federal lawsuits alleging sexual harassment of some female employees at Rochester's Radisson Plaza Hotel by male guests from the Middle East. The Radisson is one of Chafoulias' business interests.

Peterson was the attorney representing the women in those federal lawsuits, which were subsequently consolidated and settled out of court. Chafoulias then filed the defamation lawsuit in Olmsted District Court, naming both ABC and Peterson as defendants. Wieners dismissed ABC from the lawsuit earlier last year.

Michael Berens, attorney for Chafoulias, said the appeal brings both parties back into the legal fray. He said that at the time the action was dismissed against ABC, it was not appealable because it was not a final order since issues remained in the case. When the judge dismissed the action against Peterson in June, that was the court's final order. Berens said both orders were now open to appeal, and both have been appealed.

The core issue of the legal battle are statements Peterson made on the program claiming that Chafoulias knew about the harassment for years and failed to take action.

Wieners had ruled that Chafoulias was a "limited purpose public figure" on the date the ABC report aired, meaning Chafoulias had to meet a higher burden and show ABC aired Peterson's statement with knowledge of its falsity or reckless disregard of the truth. The judge said Chafoulias had not met that higher burden and dismissed the action.

Berens has said the key issue on appeal is Wieners' ruling that Chafoulias was a limited public figure at the time the program aired, raising the standard that had to be met to prove defamation.

A three-judge panel will hear oral arguments on the appeal at 11:15 a.m. Feb. 5 at the Minnesota Judicial Center in St. Paul.

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