___________ No. 95-3473

___________ Lundell Manufacturing Company, * Inc., * * * Plaintiff - Appellant, * Appeal from the United States * District Court for the * Northern District of Iowa. v. * * American Broadcasting Companies,* Inc., * * Defendant - Appellee. *

___________ Submitted: April 10, 1996 Filed: October 15, 1996

___________ Before WOLLMAN, JOHN R. GIBSON, and HANSEN, Circuit Judges.

___________ JOHN R. GIBSON, Circuit Judge.
Lundell Manufacturing Company appeals from the district court's order granting American Bro adcasting Companies judgment as a matter of law, and setting aside a jury verdict of just over one million dollars for Lundell
on its libel action. ABC broadcast a story on "World News Tonight wit h Peter Jennings," reporting that a garbage recycling machine manufactured by Lunde ll "does not work." Lundell sued for libel, a jury returned a verdict in its favor, and the district court set aside the jury verdict. On appeal, Lundell argues that the district court erred in setting aside the jury verdict because there was substantial evidence that

### -2-

the "sting" of the de famatory statement was false. Lundell also contends that the court erred in setting aside the lost p rofits award because there was evidence of lost profits damages. We reverse.

On Jul y 2, 1992, ABC broadcast a story on "World News Tonight wit h Peter Jennings" as part of the program's continuing "Anger in America " reports. Jennings introduced the story:

Our fi nal report tonight is about garbage, which in th e case of a small rural county in Georgia, is making an awful lot of people angry. What we have here is another example of why people are frustrated or angered by government.

ABC reporter, Rebecca Chase, began the story by explaining th e predic ament of Berrien County taxpayers. An on-screen graphic labele d "Garbage Tax" appeare d at the beginning of the story, and Chase began her report:

In thi s south Georgia county of tobacco farms and peca n groves, taxpayers are angry that they are stuck with a thre e million dollar debt for this garbage recycling machine tha t they never approved and does not work

. (Emphasis added).

The story continued with Chase interviewing an upset taxpayer, an d then describing the background of the controversy:

In 19 88, Berrien County had no place to put its garbag e bec ause the landfill was full. So the county commissio n decided to buy this garbage machine with revenue bo nds which do not require voter approval.

As Chase made this statement, television viewers saw a corresponding vide o showing the Lundell machine in Berrien County.

### Lundell also alleged that two other statements in the story 1 

### were defamatory: the statement that "no one found a buyer" for the fuel p ellets produced by the machine, and the statement tha t "taxpayers are now forced to have their trash hauled to anothe r county's landfill." The district court dismissed both of these claims, and Lundell does not raise these issues on appeal.
-3- Further in the story, viewers were shown another recycling machin e sorting solid waste as Chase stated:

The ma chine was supposed to work like this one i n Ten nessee, sorting and recycling up to ninety percent of th e county's garbage and pay ing for itself by selling the recycled mat erials and charging user fees. That is how then

commissioner Joe Stallings promised it would work h ere. It did not.

Chase then interviewed the former Commissioner, Joe Stallings, who stated: "There's nothing physically wrong with the machine. It's the people."

Chase continued:
Stallings blames people for not giving the machine a chance. But most people here blame him for misleading the m about how much it cost to operate the plant. It wa s five times more exp ensive than he said it would be. The machine turne d the garbage into fuel pellets and compost, but no one found a buyer. So the unsold material piled up outside -- nothing more than exposed trash. The state has now ordered the plant shut down as an environmental hazard.

The story

then detailed citizen responses, including a class action lawsuit to void the taxpayers' obligation to pay for the recycling project

. The story concluded by telling that Berrien Coun ty taxpayers now must have their garbage hauled to another county for disposal.

Lundell sued ABC, alleging that the statement that the recyclin g machine "does not work" falsely implied that the recycling machine was not mechanically operable. ABC concedes 1

### -4-

that the recycling machine was mechanically sound, and that the reaso n Berrien County no longer used the machine was be cause the county could not sell the by-products at a price sufficient to cover the machine's operatin g expenses. ABC defends the statement, arguing that the phrase "does no t work" accurately implied that the Lundell machine and Berrien County' s recycling plan did not work as intended or promi sed because the system did not work in a financially viable manner.

ABC filed a motion for summary judgment, arguing that Lundell could not d emonstrate that the statement that the machine "did not work" wa s false, and that the challenged statement was not actionable because it was substantially true. The district court ruled that Lundell must bear the burden of proving tha t the challenged statement was false. See In re IBP Confid ential Business Documents Litigation , 797 F.2d 632, 647 (8th Cir

. 1986) (en banc), cert. denied , 479 U.S. 1088 (1987). The court recognized , however, that even if the statement was false, Lundell could not recover for defamation if the "gist" or "sting" of the report was substantiall y true. Se e Behr v. Meredith Corp. , 414 N.W.2d 339, 342 (Iowa 1987)

. Nevert heless, the court denied ABC's motion, holding that a dispute d question of fact existed as to the "sting" of the report and, therefore, the jury must decide the question. At the close of Lundell's evidence, th e court directed a verdict for ABC on Lundell's cl aim of actual malice. The court concluded that Lundell was a "private figure plaintiff" and , therefore, must show by a preponderance of the evidence that ABC breached the st andard of care of reasonably prudent professional broadcast new s employees in broadcasting the report. See Gertz v. Robert Welch, Inc. , 41 8 U.S. 323, 347 (1974); Jones v. Palmer Communications, Inc. , 440 N.W.2d 884 , 898 (1989).

### -5- Following an eight-day trial, the jury returned a verdict for L undell assessing $900,000 in damages for injury to reputation and $158,000 i n damages for lost profits. Later, the court granted ABC's renewed motion for ju dgment as a matter of law, ruling that the news report wa s substantially true as a matter of law. The court also ruled that if it ha d not entere d judgment as a matter of law, it would have set aside th e $158,0 00 lost profits award because of insufficient evidence. Lundel l appeals.

I.

Acritical dispute in this case is over our standard of review

. Lundell argues that there is substantial evidence that ABC's statement tha t the machine did not work is false, and, therefore, the court could no t dec ide that the report was substantially true as a matter of law, an d neither the district court nor this court can disturb the jury's finding.

Lundell argues that we are guided by our usual standard for rev iewing
a district court's decision to enter judgment as a matter of law. Under that standard, we ask whether there is sufficient evidence to support a jury verdict. White v. Pence , 961 F.2d 776, 779 (8th Cir. 1992) (standard for g ranting a motion for judgment as a matter of law). We analyze th e evidenc e in the light most favorable to Lundell, and we do not weigh o r eval uate the evidence or consider questions of credibility. Id. T o sustain a motion for judgment as a matter of law, all the evidence mus t point one way and be susceptible of no reasonable inference sustainin g Lundell's position. Id.

ABC, on t he other hand, contends that we are not restrained in this First Amendment case by the deference ordinarily accorded jury findings. Citing New York Times Co. v. Sullivan , 376 U.S. 254 (1964), ABC argues tha t
we must "make an independent examination of the whole record," unrestraine d by the deference ordinarily

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afforded to the jury, in order to ensure that no "forbidden intrusion on the field of free expression" has occurred. Id. at 285 (internal quotatio n and citation omitted).

To re move the chilling effect of defamation laws and to encourag e "uninhibited, robust, and wide-open" debate, the Supreme Court created a constit utional rule protecting the good faith criticism of governmen t official s in New York Times . 376 U.S. at 270-71. Because freedoms o f expression require "b reathing space," id. at 272, the Court held that the Consti tution "prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves tha t the statement was made with `actual malice.'" Id. at 279-80. Actua l malice is a statement made "with knowledge that it was false or wit h reckl ess disregard of whether it was false." Id. at 280. To ensure n o fo rbidden intrusion on these First Amendment liberties, an appellat e court's review of a trial court's finding of actual malice is no t
con trolled by the "clearly erroneous" standard of Federal Rule of Civi l Procedure 52(a). Bose Corp. v. Consumers Union of United States, Inc. , 46 6 U.S. 485, 498-511 (1984). "Judges, as expositors of the Constitution, mus t independently decide whether the evidence in the record is sufficient to
cross the constitutional threshold that bars the entry of any judgment tha t is not supported by clear and convincing proof of `actual malice.'" Id. at 511.

The Supreme Court examined the protection for media defendants i n suits bro ught by private individuals in Gertz , 418 U.S. 323. The Cour t determ ined that the New York Times ' actual malice standard wa s inappr opriate in suits brought by private persons attempting to prov e injury to their reputation on a matter of public interest. Id. at 344-47. Th e Court nevertheless imposed two other constitutional limitations

. First, the Court held that the states could not impose liability without fault. Id. at 346-47. Thus, a private figure cannot recover against a media

### -7-

defendant without showing that the statement at issue was false and th e media defendant was at fault in publishing the statement. Id. at 347

. Second, t he Court held that the states could not permit recovery o f presumed or punitive damages without a showing of actual malice. Id. at 349-50.

ABC argues that Philadelphia Newspap ers, Inc. v. Hepps , 475 U.S. 767 (1986), made the find ing of falsity a constitutional rule requiring us to ind ependently review the record to determine whether there has been an y "forbidden intrusion on the field of free expression." New York Times , 37 6 U.S. at 285.

In Philadelphia Newspapers , a series of newspaper articles link ed the plainti ffs to organized crime. The Court decided that the common-la w presumption that defa matory speech is false cannot stand when a plaintiff seeks damages against a media defendant for spee ch of public concern. 475 U.S. at 777. After examining the case law concerning the constitutional limits on defamation suits, the Court explained:

Wh en the speech is of public concern and the plaintiff is a public official or public figure, the Constitution clearl y requires the plaintiff to surmount a much higher ba rrier before recovering damages from a media defendant than is r aised by the common law. When the speech is of public concern but th e plaintiff is a private figure, as in Gertz, the Constitution sti ll supplants the standards of the common law, but th e cons titutional requirements are, in at least some of thei r ran ge, less forbidding than when the plaintiff is a publi c figure and the speech is of public concern. When t he speech is of exclusively private concern and the plaintiff is a private figure, as in Dun & Bradstreet , the constitutional requirements do not necessarily force any change in at least some of th e features of the common-law landscape.

Id. at 775 (emphasis added).

The Court emphasized that "the common-law presumption that

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defamatory speech is false cannot stand when a plaintiff seeks damage s against a media defendant for speech of public concern." Id. at 777.

Fromthis language in Philadelphia Newspapers , ABC argues that th e findin gs of falsity and substantial truth are subject to constitutiona l rules requiring this court to independently evaluate the findings in a sui t brought by a private figure against a media defendant. ABC contends that
we cannot focus on the literal truth or falsity of the statement, bu t rather we must decide whether the challenged statement meets th e constitutional requir ements of a false statement. "Minor inaccuracies do not amount to falsity so long as `the substance, the gist, the sting, of the libelous charge b e justified.'" Masson v. New Yorker Magazine, Inc. , 501 U.S. 496, 517 (1991) (quoting Heuer v. Kee , 59 P.2d 1063, 1064 (Cal. Dist. Ct. App. 1936)). A statement is not false unless "it would have a different effect on the mind of the reader from that which the pleade d truth would have produced." Id. (internal quotation omitted).

Lundell responds that the independent review mandated in New Yor k Times only applies to a lower court finding of actual malice, and not to findings of falsity o r substantial truth. Lundell argues that the issues of fa lsity and substantial truth are simply not controlled by th e "constitutional rule" set forth in New York Times . Lundell points out tha t the court correctly instructed the jury on the f alse statement requirement and ABC's defense of substantial truth, and we cannot overturn the finding s of the jury.
There is no question that the independent review required by Ne w York Times applies to a trial court finding of actual malice. 376 U.S. at 284- 86. Accord Bose Corp. , 466 U.S. at 514 ("We hold that the clearly

erroneous standard of Rule 52(a) of the Federal Rules of Civil Procedure does not prescribe the standard of review to be applied in reviewing a determination of actual malice in a

### -9-

case governed by New York Times Co. v. Sullivan

. "). Here, however, we are not reviewing a findi ng of actual malice. The district court categorized Lun dell as a private figure plaintiff. Thus, the issue boils down t o whether findings of f alsity or substantial truth are constitutional rules requiring us to independently evaluate the record.

Wh en the Court in Philadelphia Newspapers discussed overriding th e
comm on law because of First Amendment protections, it focused on th e allocation of the burden of proof. See 475 U.S. at 777. The Pennsylvania Supreme Court, reversing the trial court, held t hat a Pennsylvania statute placed the burden of proving truth on the publis her, and that this did not viol ate the Federal Constitution. Id. at 770-71. The Supreme Cour t reversed, holding that the common-law presumption that defamatory speech is false is unconstitutional when a plaintiff seeks damages against a medi a defendant for speech of public concern. Id. at 777. The Court identified the b urden of proof, not the element of falsity, as the constitutiona l requirement. To decide the case, the Court only held that the Constitutio n placed the burden of proving falsity on the plaintiff. Indeed, the Court emphasized that it did not consider what quantit y of proof of falsity that

a private figure plaintiff must present to recover. Id. at 779 n.4; Accor d Bose Corp. , 466 U.S. at 514 n.31 (commenting that there might be many othe r question s of fact in a defamation case that are irrelevant to th e constitutional standa rd of New York Times Co. v. Sullivan , and to which a "clearly erroneous" standard of appellate review applies).

In Masson , the Supreme Court address ed whether a writer's alteration of quotations attributed to the subject of an interview could establish th e actual malice required for a defamation suit by a public figure. 501 U.S. at 499. The Supreme Court's analysis of actual malice required it t o consider the concept of falsity. Id. at 513. The Court examined si x different published passages to

### "On summary judgment, we must draw all ju stifiable inferences 1 

### in favor of the nonmoving party, including questions of cred ibility and of the weight to be accorded particular evidence." Mass on , 501 U.S. at 520 (citing Anderson v . Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986). We examine the evidence in a light most favorable to the nonmoving party, to see if there is sufficient evidence t o support a jury finding. Anderson , 477 U.S. at 255.
-10- determine whether the published passages were materially different from th e tape-recorded statements, thereby creating an issue of fact for the jury
as to falsity. Id. at 522-25. The Court concluded that one of th e passag es did not materially alter the meaning of the tape-recorde d statement and therefore, was not actionable. Id

. at 524. With respect to the other five passages, however, the Court deci ded that a reasonable jury could f ind a material difference between the meaning of the publishe d passages and that of the tape-recorded statements. Id. at 522-25. Becaus e
a jury could find the differences in the statements exposed the interviewe e to contempt, ridicule, or obloquy, the Court hel d that it could not decide the issue of falsity as a matter of law. Id. Masson makes abundantl y clear that in reviewing a summary judgment ruling, which involves a simila r standard as a review of a directed verdict rulin g, we examine the evidence in the li ght most favorable to the plaintiff and decide if there i s sufficient evidence to support a jury finding of falsity. Id. at 520-21. 1

Recently, we reviewed the district c ourt's grant of summary judgment to a defe ndant television station on a defamation claim. Toney v. WCC O Television, Midwest C able & Satellite, Inc. , 85 F.3d 383 (8th Cir. 1996). We reversed the district court's grant of summary judgment as to one of th e
seven statements alleged to be defamatory. Id. at 389. The district cour t ruled that the statem ent was not actionable because even if the statement
was defamatory, it was true. Id. at 386. In an opinion written by Justic e White, we agreed with the district court's conclusion that one of th e statements "could be defamatory," and, therefore, the issue was one for a jury to decide. Id. at 388. We disagreed,

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however, with the district court's conclusion that the statement was "so plainly true that it could be so characterized as a matter of law." Id. We directed that this question should be decided by a jury. Id. at 389.

This is not a situation where the un derlying facts as to the gist or sting of the defamato ry charge are undisputed so that the trial court may determine substantial truth as a matter of law. Compare Campbell v. Quad City Times, Inc. , 547 N.W.2d 608, 610 (Iowa Ct. App. 1996), with Jones , 44 0 N.W.2d at 891. As the Third Circuit held in Sch iavone Construction Co. v. Tim e, Inc. , "a jury must resolve the question of the sting becaus e reasonable persons could differ on that question." 847 F.2d 1069, 1084 (3 d Cir. 1988).

There are other issues in defamation actions which courts hav e
res erved for the jury to decide. For example, in Milkovich v. Lorai n Journal Co. , 497 U.S. 1 (1990), the Supreme Court rejected the argumen t that opinions are abs olutely protected by the First Amendment, id. at 18- 19, recognizing that "expressions of `opinion' may often imply an assertio n of objective fact," id. at 18. The Court allowe d the defamation action to go forward, ruling that a reasonable trier of fa ct could find that the socalled opinion could be interpreted as a false assertion of fact. Id. at 21. Had the Court believed it must independently decide whether a statement constituteda false statement of fact, the Court would not have used this inquiry. Accord Partington v. Buglios i , 56 F.3d 1147, 1153 (9th Cir. 1 995) (standard for summary judgment is whether a reasonabl e factfinder could conclude that the statements imply a false assertion of objective fact).
Philadelphia Newspapers , Masson , and, in a sense, Milkovich , al l point to our determination that the First Amendment commands in a defamation case brought by a private plaintiff against a media defendant only that we review the record to determine whether a

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reasonable trier of fact could find that the statement could be interprete d
as a f alse assertion of fact. In essence, these cases support a sufficiency of the evidence analysis.

We are fu rther supported in this conclusion by Harte-Hanks, Inc. v. Connaughton , 491 U.S. 657 (1989), where the Supr eme Court, in reviewing an actual malice determination, stated that the clearly erroneous standar d could be applied to the credibility determinations, but the reviewing cour t
mus t determine whether the statements are the character which the Firs t Amendme nt protects. Id. at 686-88. On review of the record, it agree d with the Court of App eals that the evidence supported a finding of actual malice. Id. at 689.
Within the context of deciding wheth er there is substantial evidence to su pport the jury's finding of falsity, we must also discern whethe r there has been any intrusion on the protections of the First Amendment

. Thus, if no reasonabl e jury could conclude that the statement was a false statement of material fact, the libel defendant is protected from a defamation suit. See , e.g. , Haynes v. Alfred A. Knopf, Inc. , 8 F.3d 1222, 1228 (7th Cir. 1993) ("The rule making substantial truth a complete defens e and the constitutional limitations on defamation suits coincide.") ; Campbell , 547 N.W.2d at 610. The question of whether there has been any intrus ion on First Amendment principles is seemingly subsumed in th e inquiry as to whether there is substantial evidence to support the jury's findings as to falsity and substantial truth. See , e.g. , Norse v. Henry Holt & Co. , 991 F.2d 563, 567 (9th Cir. 1993) (s ummary judgment for author appropriate when no reasonable jury could understand the statement, when read in context, to be defamatory); Beverly Hill s Foodland, Inc. v. United Food & Commercial Wor kers Union, Local 655 , 39 F.3d 191, 195-96 (8th Cir. 1994) (summary judgment for union appropriate when its statements could no t reasonably be read to be false assertions of fact).

### -13- II.
Regardless of our standard of review , ABC contends that the district court correctly granted judgment to it because Lundell did not prove the falsity of the statement. Alternatively, ABC argues that it is entitled to judgme nt as a matter of law because Lundell is a public figure fo r purposes of this action, and did not prove actua l malice as defined in New York Times

.

A.
In this diversity case, we review the district court's interpre tation of Iowa law de novo, and give no deference to the district court' s interpretation of state law. Salve Regina College v. Russell , 499 U.S. 22 5 (1 991). Of course, Iowa courts must apply the governing federa l constitutional standa rds in this defamation case. Toney , 85 F.3d at 386.

In Iowa, libel "is the malicious publication, expressed either i n printing or in writing, or by signs and pictures, tending to injure th e reput ation of another person or to expose the person to public hatred , contempt, or ridicule or to injure the person in the maintenance of th e person's business." Vinson v. Linn-Mar Community Sch. Dist. , 360 N.W.2d 108, 115 (Iowa 1984) (internal citation and quotation omitted). Under Iow a law, whether a statement is defamatory "must be determined by giving to th e subject-matter thereof, as a whole, that meaning which naturally belongs to the language used." Kiner v. Reliance Ins. C o. , 463 N.W.2d 9, 14 (Iowa 1990). Io wa recognizes substantial truth as an absolute defense in a defamation action. P almer Communications , 440 N.W.2d at 891. "The libel defendant need not establish the literal truth of every detail of th e broadcast so long as the `gist' or `sting' of th e broadcast in question is substantially true." Id. The "gist" or "sting" is determined by "looking at the highlight of the broadcast, the pertinent angle of it, and not to

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the items of secondary importance which are inoffensive details, immateria l to the truth of the d efamatory statement." Id. (quoting Behr , 414 N.W.2d at 342).

ABC ar gues that the phrase "does not work" used as part of th e description of events in Berrien County constitu tes the use of language in accord with one of its accepted meanings, and, therefore, the phrase is no t materially false. ABC expands on its argument by characterizing the phras e "does not work," as i ncluding more than Lundell's interpretation that the machine was mechanically inoperable. ABC explains that a publication is substantially true wh en the allegedly false statement involves the use of language consistent w ith an accepted meaning. Because the machine failed to function on a financially self-sufficient basis, failed to solve th e county's waste dispos al crisis, and had not operated since its permit had been suspended, ABC contends the phrase is substantially true.

In Bose Corporation , a manufacturer sued Consumer Reports based o n statements disparaging a new type of Bose speakers. 466 U.S. at 487-88. The Court concluded that the statement was not an assessment of events tha t speak for themselves, but "one of a number of possible rationa l interpretations of an event that bristled with a mbiguities and descriptive challenges for the writer." Id. at 512 (interna l quotation omitted). The Court did not allow r ecovery for choice of language which, though perhaps reflec ting a misconception, represented "the sort of inaccuracy that i s commonplace in the forum of robust debate to whi ch the New York Times rule applies." Id. at 513. Similarly, in Janklow v . Newsweek, Inc. , 788 F.2d 1300 (8th Cir.) (en banc), cert. denied , 479 U.S. 883 (1986), we state d that we "will not make editorial judgments about specific word choice in order to portray a plaintiff in the best possibl e light, particularly when the `sting' of the implication . . . is still present when the ful l chronology is laid out." Id. at 1306.

### -15- Contrary to ABC's interpretation, th e statement did not identify the system as not working, but the machine itself. The statement was specific : "[T] his garbage recycling machine . . . does not work." See Kiner , 46 3 N.W.2d at 14. The court used the exact words of the broadcast i n submit ting the question of falsity to the jury. The jury returned a general verdict in Lundell's favor, requiring it to find that the statemen t
wa s false. The sting of the broadcast is the heart of the matter i n question -- the hurtfulness of the utterance. Jones , 440 N.W.2d at 89 1 (quoting Behr , 414 N.W.2d at 342). If the under lying facts as to the gist
or sting are undisputed, substantial truth may be determined as a matter of law. Jones , 440 N.W.2d at 891; Behr , 414 N.W.2d at 342. Here, however , it is evident that the underlying facts as to the gist of the statement ar e the s ubject of a reasonable dispute, whether the statement goes to th e operability of the machine, or its economic shortcoming. When the languag e
us ed is capable of two meanings, including the one ascribed by a complainant, it is for the jury to decide the meaning conveyed. Vinson , 360 N.W.2d at 116. ABC's position that the statement "does not work" mean t only that the machine did not operate in a financially viable manner is no t expr essly included in the story itself. Although Stallings said th e mach ine worked and Chase later discussed the financial aspect of th e machine, the story, as a whole, never clarified the original statement tha t the machine "does not work." The statement is not nearly as ambiguous as the statements in Bose Corporationor Janklow

. The phrase "does not work" is specific and is no t the sort of inaccuracy that is "commonplace in the forum of robust debate." Masson , 501 U.S. at 51 4 (quoting Bose Corp. , 466 U.S. at 513). We, th erefore, cannot conclude that the story, as a whole, was substantially true as a matter of law.

There is substantial evidence from which a reasonable jury coul d conclude that the statement was false, and from which a reasonable jur y could conclude that the sting of the story was that

### -16-

the Lundell machine was mechanically inoperable. After carefully examinin g the videotape, we are satisfied that a reasonabl e jury could conclude from the plain meaning of the words used, that the statement that the machine "does not work" meant that the machine was inope rable. Even according ABC the independent review it requests, we are confident that there has been no forbidden intrusion on First Amendment principles.
This conclusion is reinforced by other evidence in the record. There is evidence that the very genesis of ABC's report was based on the false premise th at the machine was broken. Chase initiated the story afte r readin g an article in the Atlanta Journal- Constitution concerning th e Berrien County facili ty and local government revenue bond financing. The article stated that the facility had financial problems, but it did no t state that the Lundell machine did not work. Ne vertheless, Chase prepared a proposal for a news story about the situation in Berrien County, and her propos al included the statement that the recycling machine "has neve r worked." Chase ackno wledged at trial that she had not interviewed anyone with kn owledge of the Berrien County facility before making her stor y proposal, and that she had no knowledge of who, if anyone, her producer, Elissa Weldon, had interviewed. Chase also admitted that at the time of the broadcast she believed that the machine had a broken main shredder, an d this was one reason why she reported that the ma chine did not work. David Gaskins, the former plant manager for the Berrie n County Resource Recovery facility, testified that the entire system, including the main shredder,
was operable at the time ABC prepared its report. Others corroborated thi s testimony.

Before airing the story, Chase contacted Vernon Lundell. Lundel l told Chase that the Lundell system in Berrien County worked, tha t opposition to the sys tem was political, and that he had stayed out of the political dispute in Berrien County. A few days before the broadcast, Gar y Lamberson, an independent sales

### -17-

representative for Lundell, contacted Chase and advised her that any story on the Berrien County facility based on informat ion provided only by local politica l opponents would not tell the true story of the facility

. Lamberson urged Chase to interview the former plant managers to learn the true facts about oper ation of the system. Lamberson testified that Chase left him with the impression that she was "too busy" to conduct furthe r interviews and that the story was "a done deal."

ABC contacted Gaskins to arrange filming of the recycling system

. Gaskins was not interviewed by Chase or Weldon p rior to the broadcast. No
one fr om ABC ever asked Gaskins if the Lundell system was capable o f processing garbage. When the ABC camera crew ca me to the recycling plant,
one of th e crew members remarked to Gaskins that he understood that th e pla nt was broken down. Gaskins responded that all he needed was som e garbage to process an d "I'll fire it up." After ABC broadcast the story, Lundell contacted ABC seeking a retraction. ABC responded with a letter stating:

Contra ry to your letter, the report does not state tha t the "system" does not work. What the report does say is that the garbage recycling ma chine purchased by Berrien County does not work. This is in fact completely true. At the time of our broadcast the Berrien County machine was not functioning. As I am sure you are aware, the main shredder broke down and has not been repaired. Indeed the Georgia Department of Natura l Resources has acted to close the facility down.
This evidence amply demonstrates tha t ABC actually believed that its broadcast stated that the machine was mechanically inoperable, and ABC doe s not dispute that the machine was mechanically sound. Accordingly, there is substantial evidence from which a reasonable jury could find that the sting of ABC's broadcast was false.
Finally, ABC contends that other parts of the story negate any

### ABC also ar gues that the district court correctly granted it 2 

### judgment as a matter of law because Lundell failed to sustain its burden of proving: (1) that t he broadcast was "of and concerning" Lundell; and (2) that ABC violated the standard of care practiced by pro fessional journalists. We have carefully considered thes e arguments and conclude there is substantial evidence to supp ort the jury's findings.
-18- false implication derived from the statement that the machine wa s mechan ically inoperable: (1) the report included footage showing th e machine operating; (2 ) the report noted that the machine did turn garbage into fuel pellets and compost and showed fuel pe llets made by the machine; (3) th e report included the express statement that "there's nothin g physically wrong with the machine. It's the people"; and (4) the report showed footage of another Lundell machine operat ed by Tennessee officials.

These other parts of the story do not change our conclusion. Th e 2 report did not actually show the machine operating, but only include d footage sh owing a worker sorting garbage and fuel pellets made by th e machine. The conclusion drawn from the footage of the Tennessee machine is also inconsistent with ABC's argument. Along with the footage showing the Tennessee machine, Chase states:

The ma chine was supposed to work like this one i n Ten nessee, sorting and recycling up to ninety percent of th e county's garbage and pay ing for itself by selling the recycled mat erials and charging user fees. That is how then

commissioner Joe Stallings promised it would work h ere. It did not.

Areasonable jury could easily conclude from Chase's comparison of th e Berrie n County machine with the Tennessee machine that the Tennesse e machine worked, and the Berrien County machine did not. Cf. Treutler v. Meredith Corp. , 455 F.2d 255, 258 (8th Cir. 1972). Although Stalling s stated t hat there was nothing physically wrong with the machine, a
reason able juror could discredit the statement, as the story painte d Stallings as someone who had misrepresented the machine to the Berrie n County taxpayers.

### -19- For these reasons, we conclude there is a disputed question of fact

as to the sting of the story, and substantial evidence to support th e jury's finding of a f alse statement, making the district court's entry of judgment f or ABC erroneous. We reverse the district court's entry o f judgment for ABC as a matter of law. B.

ABC argu es in the alternative that the district court's ruling ma y be uph eld because Lundell is a public figure for the purpose of thi s action, and did not prove actual malice as defined in New York Times

.

Th e determination of a plaintiff's status as a private or publi c figure is an issue of law. Bagley , 797 F.2d at 644; Jones , 440 N.W.2d at 894 (determination of plaintiff's status is a question of law governed by federal constitutional law).

In Gertz , the Court identified two categories of public figures t o whom the New York Times standard applies:

The first category is "general purpose" public figures, those who have attained a position "of such persuasive power an d influence," and of "such pervasive fame or notoriety," that he or she may be considered "a public figure for all purposes and in a ll contexts." The second, more common, type of publi c fig ure is the "limited purpose" public figure. The cour t defined this type as a person who voluntarily injects himself or are drawn into a part icular public controversy, and thereby becomes a public figure for a limited range of issues.

418 U.S. at 351. The Court also noted that "[h]ypothetically, it may be possible for someone to become a public figure through no purposeful actio n of his own, but the i nstances of truly involuntary public figures must be exceedingly rare." Id. at 345. In determining whether an individua l should be considered a limited public figure, we must focus our attention on the "nature

### -20-

and extent of an indi vidual's participation in the particular controversy giving rise to the de famation." Gertz , 418 U.S. at 352. By so doing, we then can determine whether the individual has vo luntarily and purposefully injecte d himself into that controversy in an attempt to influence th e resolution of the controversy. Id. at 345.
Applying these factors, we must firs t identify the particular public controversy giving rise to the defamatory speech. Bagley , 797 F.2d at 645

. Here , the particular controversy giving rise to ABC's report was th e garbage disposal problem in Berrien County. This controversy is clearly
a public controversy involving questions of "public concern." See Dun & Bradstreet, Inc. v. G reenmoss Builders, Inc. , 472 U.S. 749, 761-62 (1985) (plurality opinion); Waldbaum v. Fairchild Publications, Inc. , 627 F.2 d 128 7, 1296-97 (D.C. Cir.) (defining a public controversy as one raisin g issues tha t might reasonably be expected to have an impact beyond th e parties directly enmeshed in the particular controversy), cert. denied , 44 9 U.S. 898 (1980); Johnson v. Nickerson , 542 N.W.2d 506, 511 (Iowa 1996 ) (same).

Aft er identifying the particular controversy giving rise to th e defama tion, we then examine the "nature and extent" of Lundell' s involv ement. Bagley , 797 F.2d at 645. This inquiry is necessary t o determine whether Lun dell has "thrust [itself] to the forefront of [this] particular public controvers[y] in order to influence the resolution of th e issues involved." Gertz , 418 U.S. at 345.

The Su preme Court faced a situation very similar to this case i n Hutchinson v. Proxmire , 443 U.S. 111 (1979). Hu tchinson did research with primates and received research grants from three federal agencies. Id. at 115. Senator William Proxmire began a public campaign to expose wasteful government spending by giving a "Golden Fleece" award to federal agencies who funded what Proxmire

### -21-

considered to be wasteful projects. Id. at 114. After denying protection under the Speech and Debate Clause, id. at 123-33, the Court reversed lowe r court rulings that Hutchinson was a public figure, id. at 133-36. Th e Court observed that Hutchinson's activities and public profile were like many members of his profession, and that his public writings reached a relatively small category of professionals concerned with research in huma n behavior. Id. at 135. "To the extent the subject of his publishe d writings became a matter of controversy, it was a consequence of the Golde n Fleece Aw ard." Id. The Court emphasized that, "those charged wit h defamation cannot, by their own conduct, create their own defense by makin g the claimant a public figure." Id. The Court also reasoned tha t Hutchinson did not "thrust himself or his views into public controversy to influe nce others," and at most, the public controversy consisted o f
concerns about general public expenditures. Id. The Court rejected the arguments that Hutchinson's applications for and receipt of federal grants and pu blications in professional journals elevated him to public figur e status. Id. The Court's determination was also influenced by the fac t that Hutchinson's only access to the media was limited to responding to th e announcement of the G olden Fleece award, and that Hutchinson did not have regular and continuing access to the media, one of the accouterments o f being a public figure. Id. at 136.

The Supreme Court also reversed lowe r court rulings that a plaintiff

was a limited purpose public figure in Wolston v. Reader's Digest Ass'n , 443 U.S. 157 (1979). There, publishers of a book described Wolston a s being a Sov iet agent. Id. at 159. Sixteen years before the book' s publication, Wolston had received newspaper cove rage because he had failed to comply with a grand jury subpoena and had been subject to contemp t proceedings. Id. at 162-63. Although Wolston's decision not to appea r befo re a grand jury was likely to attract media attention, the Cour t concluded that this was not the type of activity that established public figure status. Id. at 167. Wolston did not discuss the matter

### -22-

with th e press, and limited his involvement to defending the contemp t charges. Furthermore, Wolston did not fail to appear in order to influenc e the public with respect to any controversy, and did not voluntarily thrust
or inject himself into the controversy concerning Soviet espionage. Id. at 168. The Court said: "It would be more accu rate to say that [Wolston]

was dragg ed unwillingly into the controversy." Id. at 166. "A privat e individual is not automatically transformed into a public figure just by becomin g involved in or associated with a matter that attracts publi c attention ." Id. at 167. "A libel defendant must show more than mer e newsworthiness to jus tify application of the demanding burden of New York Times ." Id. at 167-168.

Lundell's status mirrors that of Hut chinson. Lundell did not inject itself into the Berri en County controversy. See Bagley , 797 F.2d at 645- 46. Cf. National Found. for Cancer Research, Inc. v. Council of Bette r Business Bureaus, Inc

. , 705 F.2d 98, 101-02 (4th Cir.), cert. denied , 464 U.S. 830 (1983). Indeed, Chase admitted that she "did not uncover an y evidence from any source that [Lundell] had attempted to inject [itself] into [ the] political debate of Berrien County." Although Lundel l contracted with the c ounty for the sale of the machine, the Supreme Court makes clear in Hutchinson and Wolston that it is the plaintiff's role in the co ntroversy, not the controversy itself, that is determinative o f public figure status. See Hutchinson , 443 U.S. at 135; Wolston , 443 U.S. at 167. Even though the garbage disposal problem was a matter of public
conce rn, we focus on Lundell's role in the controversy, not the publi c nature of the controv ersy itself. ABC does not direct us to any evidence tha t Lundell placed itself into the controversy to influence the issue s involved. See Gertz , 418 U.S. at 351-52 (plaintiff not a limited purpose public figure even though he represented a client on a matter related to the controversy at issue). Furthermore, ABC cannot, by its own conduct, create it s own defense by making Lundell a public figure. Like th e circumstances in Hutchinson , there is no evidence that

### -23-

Lundell had access to the media to refute the ABC report. 443 U.S. at 136

. Indeed, ABC denied Lundell's request for a retraction of the story. For these reasons, we reject ABC's alternative argument.

III.

ABC at tacks the award of damages on several grounds. First, AB C contends that Lundell cannot recover separate damages for reputational har m and l ost profits. Second, ABC contends Lundell failed to prove actua l dama ges and lost profits. The district court instructed the jury t o consider three different types of loss: damage to reputation, past lost profits, and future l ost profits. The jury awarded no damages for future lost profits, $158,000 for past lost profits, and $900,000 for damage to reputation.

A.
Citing M artin Marietta Corp. v. Evening Star Newspaper Co. , 417 F

. Supp. 947 (D.D.C. 197 6), ABC argues that a corporation cannot recover for both lost profits and injury to reputation.

The law of libel has long reflected the distinctio n be tween corporate and human plaintiffs by limiting corporat e recove ry to actual damages in the form of lost profits . .

. "Al though a corporation may maintain an action for libel, i t has no personal reputation and may be libeled only b y imputation about its financial soundness or business ethics."

Id. at 955 (quoting G olden Palace, Inc. v. National Broadcasting Co. , 386 F. Supp. 107 (D.D.C. 1974)).

ABC sets forth a policy argument that we should adopt the reasoning of the district courts of the District of Columbia. The Iowa courts , however, appear to uniformly allow business entities

### For these reasons, we also reject ABC's contention that the 3 

### award is excessive.
-24- to recover damages for injury to their reputatio n as well as lost profits. See , e.g. , Vojak v. Jensen , 161 N.W.2d 100, 106, 110-11 (Iowa 1968); G & H Soybean Oil, Inc. v. Diamond Crystal Specialty Foods, Inc. , 796 F. Supp. 1214, 1217 (S.D. Iowa 1992) (applying Iowa law). We therefore reject ABC' s argument.

We al so reject ABC's argument that there is insufficient proof o f actual damages. Vern on Lundell testified that Lundell began operating in 1945 and had always had an excellent reputation in the industry and i n Iowa. Another witness testified that just before the broadcast, Lundell
was t he industry leader for this type of equipment. Several witnesse s testified that after the broadcast, interest in the machine vanished. It is und isputed that Lundell never sold another machine following th e broadcast. This evidence is more than sufficient to sustain the jury' s finding t hat Lundell was damaged by the story. There is also competen t evidence to support the jury's monetary award. See Gertz , 418 U.S. at 350

. The historical sales data, as well as evidence that Lundell spent $ 2 millio n dollars in the development of the recycling system, constitute s competent evidence of the dollar value of the injury. See id. 3

B.

ABC con tends that even if we reverse the district court's entry o f judgment, we must affirm the court's alternative ruling that Lundell faile d to prove lost profits resulting from the broadcast. ABC contends that in order to recover lost profits, Lundell must identify the sales it los t because of the report.

Lundell contends that the district court can only reverse the jur y verdict if the verdict is against the great weight of the

### -25-

evidence. See White , 961 F.2d at 780. Lundell confuses the standard for
rev iewing a ruling on a motion for a new trial on the ground that th e verdict i s against the weight of the evidence with the standard fo r
rev iewing a ruling on a motion for judgment as a matter of law. Id. a t 779 -80. Here, the district court entered judgment as a matter of la w because t here was a lack of evidence of lost profits. Accordingly, ou r standard of review is whether there is sufficient evidence to support the verdict, not whether the verdict is against the great weight of th e evidence. See id.

The level of proof required to establish the exact amount of los t profits is not as high as the level of proof required to establish tha t
some loss occurred. Orkin Exterminating Co. v. Burnett , 160 N.W.2d 427, 430 (Iowa 1968). As the Iowa Supreme Court explained:

Courts have recognized a distinction be tween proof of the fact that damages have been sustained and proof of the amount of those damages. If it is speculative and uncertain whether dam ages have been sustained, recovery is denied. If th e uncertainty lies only in the amount of damages, rec overy may be had if there is proof of a reasonable basis from which th e amount can be inferred or approximated.
Id.

The I owa Supreme Court has rejected the argument that a plaintif f must identify specific lost sales to recover lost profits damages. Page County Appliance Ctr. , Inc. v. Honeywell, Inc. , 347 N.W.2d 171, 178 (Iowa 1984). Decreased income after the defendant's damaging conduct i s suf ficient to support an award for lost profits so long as the recor d discloses a reasonable basis from which the amount can be inferred o r approxima ted. Id. "Simply because the loss of profits cannot be show n with precision, defen dant who caused the damages, may not be heard to say that no d amages may be awarded." Orkin , 160 N.W.2d at 430 (quotin g Exercycle of Mich. Inc. v. Wayson , 341 F.2d 335, 337 (7th Cir.

### -26-

1965)).

The district court set aside the los t profits award for two reasons. First, it concluded that there were "tremendous problems" with the machine s sold by Lundell, and that Lundell had to take back most machines it sold throug h litigation or otherwise. Second, the court concluded tha t Lundell's evidence concerning lost sales was inc onsistent. Vernon Lundell testified that Lundell would have sold over twenty systems in the two year s following the story. Vernon Lundell's son-in-law and vice-president of th e company, Steve Paulsen, testified that he thought the company could have only sold four systems.

Although Lundell's and Paulsen's testimony is inconsistent, it does not cause us to conclude that there was no reasonable basis for calculatin g lost profit damages. The jury was free to accep t or reject the opinion of either one of these w itnesses. The discrepancy between the two witnesses does not make the damage amounts lacking in a reasonable basis, but only demonstrates the opinions of different witnesses. Further, there was othe r evidence to support the lost profits award. First, there was evidence tha t before the report there was substantial interest in the Lundell machine, and following the rep ort, Lundell could not sell a single machine. There was evidence that in the years before the report, Lundell sold an average of two recycling systems per year, and that each machine had a gross profi t of approximately $240,000. The historical sales figures for the year s preceding the story also provide a reasonable ba sis for approximating lost profits damages. Indeed, Lundell earned $158,00 0 in 1987 on sales of over $1.5 million, representing the sale of one machine.

Furthe rmore, the issue of whether the machines had "tremendou s problems" was conflic ting. Lundell presented extensive evidence that the defamatory statements in the ABC report killed interest and sales of the Lundell machine. ABC refuted this theory,

### -27-

presenting evidence that the loss of sales was caused by intrinsic problem s with the machine. There was evidence supporting both theories, and it was an issue for the jury, not the court, to resolve.
Thus, we conclude that a reasonable basis existed to support anaward of l ost profits. We reverse the district court's alternative rulin g setting aside the lost profits award.
We reverse the district court's entry of judgment for ABC. We remand to the district court with directions that the court reinstate the jur y verdict for Lundell and award of damages for Lundell, including damages fo r lost profits.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.