Appeals court upholds ruling in defamation case

Panel dismisses suit by Chafoulias

By Janice Gregorson

A Rochester businessman was not defamed by a Minneapolis attorney or ABC television in a 1997 nationally televised report involving sexual harassment claims, the Minnesota Court of Appeals ruled Tuesday.

The three-judge panel upheld a district court ruling dismissing the defamation lawsuit brought by Rochester developer Gus Chafoulias. The appeals court agreed with District Judge Joseph Wieners in finding that Chafoulias was a limited–purpose; public figure at the time and had failed to prove that either Minneapolis attorney Lori Peterson or ABC Television had acted with actual malice in statements made and aired in a "Prime Time Live" segment in August 1997.


At the same time, Judge G. Barry Anderson, who wrote the opinion for the panel, was critical of both Peterson and ABC, saying the television segment wasn't fair or balanced.

The segment was 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. In the television segment, Peterson said Chafoulias knew about the harassment for years and had failed to take any action.

After the federal lawsuit was settled, Chafoulias filed a defamation lawsuit in Olmsted District Court.

Wieners 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 he had not met that higher burden and dismissed the suit. Chafoulias appealed.

On Tuesday, the Court of Appeals affirmed Wieners' decision. The judges said that to determine if Chafoulias was a limited-purpose public figure in this matter, they needed to consider whether a public controversy existed, whether Chafoulias assumed a prominent role in that controversy and whether the allegedly defamatory statement was related to the public controversy. Chafoulias contended there was no public controversy, only media attention. He also argued that if there was a public controversy, it was one that was generated by Peterson and ABC.

The judges disagreed. Anderson said the evidence shows that Chafoulias repeatedly interacted with the news media in an attempt to influence the resolution of the controversy and control the public perception of the allegations against himself and the Radisson.

"The evidence here shows that appellant's (Chafoulias) involvement in the harassment controversy went far beyond the low-key participation one might expect of someone attempting to avoid the public eye,'' Anderson wrote.

Chafoulias also challenged Wieners' conclusion that ABC and Peterson did not act with actual malice in making and broadcasting the allegedly defamatory statement.


The judges agreed with Wieners, saying Chafoulias had failed to present convincing evidence of actual malice.

At the same time, Anderson had sharp comments about the conduct of Peterson and ABC. He said Peterson's actions, which included distributing "Wanted" posters in the Rochester area offering cash rewards for the apprehension of various Arab men identified by name and photograph, "were appalling and a discredit to the legal profession."

Still, he said, her involvement in publicizing the controversy was an effect of the controversy, and not its cause, as Chafoulias contended.

Because the judges upheld the district court decision, they did not address ABC's claim that the Prime Time report was privileged as a fair and accurate report of the federal lawsuits.

Anderson said it is unlikely the segment would enjoy that privilege.

He called the report a montage of statements by parties to the harassment lawsuit edited to create a factually accurate but rhetorically and "breathlessly inflammatory narrative."

"Nothing about the segment gives the impression of fair, objective or balanced reporting,'' Anderson said in a footnote to his opinion. "But bad journalism is not the same as reckless disregard of the truth."

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