___________

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 Broadcasting 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 with

Peter Jennings," reporting that a garbage recycling machine manufactured

by Lundell "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
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the "sting" of the defamatory statement was false. Lundell also contends

that the court erred in setting aside the lost profits award because there

was evidence of lost profits damages. We reverse.

On July 2, 1992, ABC broadcast a story on "World News Tonight with

Peter Jennings" as part of the program's continuing "Anger in America"

reports. Jennings introduced the story:

Our final report tonight is about garbage, which in the

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 the

predicament of Berrien County taxpayers. An on-screen graphic labeled

"Garbage Tax" appeared at the beginning of the story, and Chase began her

report:

In this south Georgia county of tobacco farms and pecan

groves, taxpayers are angry that they are stuck with a three

million dollar debt for this garbage recycling machine that

they never approved and does not work.

(Emphasis added).

The story continued with Chase interviewing an upset taxpayer, and

then describing the background of the controversy:

In 1988, Berrien County had no place to put its garbage

because the landfill was full. So the county commission

decided to buy this garbage machine with revenue bonds which do

not require voter approval.

As Chase made this statement, television viewers saw a corresponding video

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 pellets produced by the machine, and the statement that

"taxpayers are now forced to have their trash hauled to another

county's landfill." The district court dismissed both of these

claims, and Lundell does not raise these issues on appeal. 

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Further in the story, viewers were shown another recycling machine

sorting solid waste as Chase stated: 

The machine was supposed to work like this one in

Tennessee, sorting and recycling up to ninety percent of the

county's garbage and paying for itself by selling the recycled

materials and charging user fees. That is how thencommissioner Joe Stallings promised it would work here. 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 them

about how much it cost to operate the plant. It was five times

more expensive than he said it would be. The machine turned

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 County taxpayers now must have

their garbage hauled to another county for disposal. 

Lundell sued ABC, alleging that the statement that the recycling

machine "does not work" falsely implied that the recycling machine was not

mechanically operable. ABC concedes 1
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that the recycling machine was mechanically sound, and that the reason

Berrien County no longer used the machine was because the county could not

sell the by-products at a price sufficient to cover the machine's operating

expenses. ABC defends the statement, arguing that the phrase "does not

work" accurately implied that the Lundell machine and Berrien County's

recycling plan did not work as intended or promised because the system did

not work in a financially viable manner.

ABC filed a motion for summary judgment, arguing that Lundell could

not demonstrate that the statement that the machine "did not work" was

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 that the challenged statement was false. See In re IBP

Confidential 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 substantially

true. See Behr v. Meredith Corp., 414 N.W.2d 339, 342 (Iowa 1987).

Nevertheless, the court denied ABC's motion, holding that a disputed

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, the

court directed a verdict for ABC on Lundell's claim 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 standard of care of reasonably prudent professional broadcast news

employees in broadcasting the report. See Gertz v. Robert Welch, Inc., 418

U.S. 323, 347 (1974); Jones v. Palmer Communications, Inc., 440 N.W.2d 884,

898 (1989).
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Following an eight-day trial, the jury returned a verdict for Lundell

assessing $900,000 in damages for injury to reputation and $158,000 in

damages for lost profits. Later, the court granted ABC's renewed motion

for judgment as a matter of law, ruling that the news report was

substantially true as a matter of law. The court also ruled that if it had

not entered judgment as a matter of law, it would have set aside the

$158,000 lost profits award because of insufficient evidence. Lundell

appeals.

 

I.

A critical dispute in this case is over our standard of review.

Lundell argues that there is substantial evidence that ABC's statement that

the machine did not work is false, and, therefore, the court could not

decide that the report was substantially true as a matter of law, and

neither the district court nor this court can disturb the jury's finding.

Lundell argues that we are guided by our usual standard for reviewing

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 granting a motion for judgment as a matter of law). We analyze the

evidence in the light most favorable to Lundell, and we do not weigh or

evaluate the evidence or consider questions of credibility. Id. To

sustain a motion for judgment as a matter of law, all the evidence must

point one way and be susceptible of no reasonable inference sustaining

Lundell's position. Id.

ABC, on the 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 that

we must "make an independent examination of the whole record," unrestrained

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 quotation

and citation omitted). 

To remove the chilling effect of defamation laws and to encourage

"uninhibited, robust, and wide-open" debate, the Supreme Court created a

constitutional rule protecting the good faith criticism of government

officials in New York Times. 376 U.S. at 270-71. Because freedoms of

expression require "breathing space," id. at 272, the Court held that the

Constitution "prohibits a public official from recovering damages for a

defamatory falsehood relating to his official conduct unless he proves that

the statement was made with `actual malice.'" Id. at 279-80. Actual

malice is a statement made "with knowledge that it was false or with

reckless disregard of whether it was false." Id. at 280. To ensure no

forbidden intrusion on these First Amendment liberties, an appellate

court's review of a trial court's finding of actual malice is not

controlled by the "clearly erroneous" standard of Federal Rule of Civil

Procedure 52(a). Bose Corp. v. Consumers Union of United States, Inc., 466

U.S. 485, 498-511 (1984). "Judges, as expositors of the Constitution, must

independently decide whether the evidence in the record is sufficient to

cross the constitutional threshold that bars the entry of any judgment that

is not supported by clear and convincing proof of `actual malice.'" Id.

at 511.

The Supreme Court examined the protection for media defendants in

suits brought by private individuals in Gertz, 418 U.S. 323. The Court

determined that the New York Times' actual malice standard was

inappropriate in suits brought by private persons attempting to prove

injury to their reputation on a matter of public interest. Id. at 344-47.

The 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
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defendant without showing that the statement at issue was false and the

media defendant was at fault in publishing the statement. Id. at 347.

Second, the Court held that the states could not permit recovery of

presumed or punitive damages without a showing of actual malice. Id. at

349-50.

ABC argues that Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767

(1986), made the finding of falsity a constitutional rule requiring us to

independently review the record to determine whether there has been any

"forbidden intrusion on the field of free expression." New York Times, 376

U.S. at 285. 

In Philadelphia Newspapers, a series of newspaper articles linked the

plaintiffs to organized crime. The Court decided that the common-law

presumption that defamatory speech is false cannot stand when a plaintiff

seeks damages against a media defendant for speech of public concern. 475

U.S. at 777. After examining the case law concerning the constitutional

limits on defamation suits, the Court explained:

When the speech is of public concern and the plaintiff is a

public official or public figure, the Constitution clearly

requires the plaintiff to surmount a much higher barrier before

recovering damages from a media defendant than is raised by the

common law. When the speech is of public concern but the

plaintiff is a private figure, as in Gertz, the Constitution

still supplants the standards of the common law, but the

constitutional requirements are, in at least some of their

range, less forbidding than when the plaintiff is a public

figure and the speech is of public concern. When the 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 the

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 damages

against a media defendant for speech of public concern." Id. at 777.

From this language in Philadelphia Newspapers, ABC argues that the

findings of falsity and substantial truth are subject to constitutional

rules requiring this court to independently evaluate the findings in a suit

brought by a private figure against a media defendant. ABC contends that

we cannot focus on the literal truth or falsity of the statement, but

rather we must decide whether the challenged statement meets the

constitutional requirements of a false statement. "Minor inaccuracies do

not amount to falsity so long as `the substance, the gist, the sting, of

the libelous charge be 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 pleaded

truth would have produced." Id. (internal quotation omitted). 

Lundell responds that the independent review mandated in New York

Times only applies to a lower court finding of actual malice, and not to

findings of falsity or substantial truth. Lundell argues that the issues

of falsity and substantial truth are simply not controlled by the

"constitutional rule" set forth in New York Times. Lundell points out that

the court correctly instructed the jury on the false statement requirement

and ABC's defense of substantial truth, and we cannot overturn the findings

of the jury.

There is no question that the independent review required by New 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 clearlyerroneous 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
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case governed by New York Times Co. v. Sullivan."). Here, however, we are

not reviewing a finding of actual malice. The district court categorized

Lundell as a private figure plaintiff. Thus, the issue boils down to

whether findings of falsity or substantial truth are constitutional rules

requiring us to independently evaluate the record. 

When the Court in Philadelphia Newspapers discussed overriding the

common law because of First Amendment protections, it focused on the

allocation of the burden of proof. See 475 U.S. at 777. The Pennsylvania

Supreme Court, reversing the trial court, held that a Pennsylvania statute

placed the burden of proving truth on the publisher, and that this did not

violate the Federal Constitution. Id. at 770-71. The Supreme Court

reversed, holding that the common-law presumption that defamatory speech

is false is unconstitutional when a plaintiff seeks damages against a media

defendant for speech of public concern. Id. at 777. The Court identified

the burden of proof, not the element of falsity, as the constitutional

requirement. To decide the case, the Court only held that the Constitution

placed the burden of proving falsity on the plaintiff. Indeed, the Court

emphasized that it did not consider what quantity of proof of falsity that

a private figure plaintiff must present to recover. Id. at 779 n.4; Accord

Bose Corp., 466 U.S. at 514 n.31 (commenting that there might be many other

questions of fact in a defamation case that are irrelevant to the

constitutional standard of New York Times Co. v. Sullivan, and to which a

"clearly erroneous" standard of appellate review applies). 

In Masson, the Supreme Court addressed whether a writer's alteration

of quotations attributed to the subject of an interview could establish the

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 to

consider the concept of falsity. Id. at 513. The Court examined six

different published passages to
 "On summary judgment, we must draw all justifiable inferences 1

in favor of the nonmoving party, including questions of credibility

and of the weight to be accorded particular evidence." Masson, 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 to

support a jury finding. Anderson, 477 U.S. at 255.

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determine whether the published passages were materially different from the

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 the

passages did not materially alter the meaning of the tape-recorded

statement and therefore, was not actionable. Id. at 524. With respect to

the other five passages, however, the Court decided that a reasonable jury

could find a material difference between the meaning of the published

passages and that of the tape-recorded statements. Id. at 522-25. Because

a jury could find the differences in the statements exposed the interviewee

to contempt, ridicule, or obloquy, the Court held that it could not decide

the issue of falsity as a matter of law. Id. Masson makes abundantly

clear that in reviewing a summary judgment ruling, which involves a similar

standard as a review of a directed verdict ruling, we examine the evidence

in the light most favorable to the plaintiff and decide if there is

sufficient evidence to support a jury finding of falsity. Id. at 520-21.1

Recently, we reviewed the district court's grant of summary judgment

to a defendant television station on a defamation claim. Toney v. WCCO

Television, Midwest Cable & Satellite, Inc., 85 F.3d 383 (8th Cir. 1996).

We reversed the district court's grant of summary judgment as to one of the

seven statements alleged to be defamatory. Id. at 389. The district court

ruled that the statement was not actionable because even if the statement

was defamatory, it was true. Id. at 386. In an opinion written by Justice

White, we agreed with the district court's conclusion that one of the

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 underlying facts as to the gist or

sting of the defamatory 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, 440

N.W.2d at 891. As the Third Circuit held in Schiavone Construction Co. v.

Time, Inc., "a jury must resolve the question of the sting because

reasonable persons could differ on that question." 847 F.2d 1069, 1084 (3d

Cir. 1988). 

There are other issues in defamation actions which courts have

reserved for the jury to decide. For example, in Milkovich v. Lorain

Journal Co., 497 U.S. 1 (1990), the Supreme Court rejected the argument

that opinions are absolutely protected by the First Amendment, id. at 18-

19, recognizing that "expressions of `opinion' may often imply an assertion

of objective fact," id. at 18. The Court allowed the defamation action to

go forward, ruling that a reasonable trier of fact 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 constituted a false statement of fact, the Court would not have

used this inquiry. Accord Partington v. Bugliosi, 56 F.3d 1147, 1153 (9th

Cir. 1995) (standard for summary judgment is whether a reasonable

factfinder could conclude that the statements imply a false assertion of

objective fact).

Philadelphia Newspapers, Masson, and, in a sense, Milkovich, all

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 interpreted

as a false assertion of fact. In essence, these cases support a

sufficiency of the evidence analysis. 

We are further supported in this conclusion by Harte-Hanks, Inc. v.

Connaughton, 491 U.S. 657 (1989), where the Supreme Court, in reviewing an

actual malice determination, stated that the clearly erroneous standard

could be applied to the credibility determinations, but the reviewing court

must determine whether the statements are the character which the First

Amendment protects. Id. at 686-88. On review of the record, it agreed

with the Court of Appeals that the evidence supported a finding of actual

malice. Id. at 689. 

Within the context of deciding whether there is substantial evidence

to support the jury's finding of falsity, we must also discern whether

there has been any intrusion on the protections of the First Amendment.

Thus, if no reasonable 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 defense

and the constitutional limitations on defamation suits coincide.");

Campbell, 547 N.W.2d at 610. The question of whether there has been any

intrusion on First Amendment principles is seemingly subsumed in the

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) (summary judgment for author

appropriate when no reasonable jury could understand the statement, when

read in context, to be defamatory); Beverly Hills Foodland, Inc. v. United

Food & Commercial Workers Union, Local 655, 39 F.3d 191, 195-96 (8th Cir.

1994) (summary judgment for union appropriate when its statements could not

reasonably be read to be false assertions of fact). 
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 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 judgment as a matter of law because Lundell is a public figure for

purposes of this action, and did not prove actual malice as defined in New

York Times. 

A.

In this diversity case, we review the district court's interpretation

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. 225

(1991). Of course, Iowa courts must apply the governing federal

constitutional standards in this defamation case. Toney, 85 F.3d at 386.

In Iowa, libel "is the malicious publication, expressed either in

printing or in writing, or by signs and pictures, tending to injure the

reputation of another person or to expose the person to public hatred,

contempt, or ridicule or to injure the person in the maintenance of the

person's business." Vinson v. Linn-Mar Community Sch. Dist., 360 N.W.2d

108, 115 (Iowa 1984) (internal citation and quotation omitted). Under Iowa

law, whether a statement is defamatory "must be determined by giving to the

subject-matter thereof, as a whole, that meaning which naturally belongs

to the language used." Kiner v. Reliance Ins. Co., 463 N.W.2d 9, 14 (Iowa

1990). Iowa recognizes substantial truth as an absolute defense in a

defamation action. Palmer Communications, 440 N.W.2d at 891. "The libel

defendant need not establish the literal truth of every detail of the

broadcast so long as the `gist' or `sting' of the 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, immaterial

to the truth of the defamatory statement." Id. (quoting Behr, 414 N.W.2d

at 342). 

ABC argues that the phrase "does not work" used as part of the

description of events in Berrien County constitutes the use of language in

accord with one of its accepted meanings, and, therefore, the phrase is not

materially false. ABC expands on its argument by characterizing the phrase

"does not work," as including more than Lundell's interpretation that the

machine was mechanically inoperable. ABC explains that a publication is

substantially true when the allegedly false statement involves the use of

language consistent with an accepted meaning. Because the machine failed

to function on a financially self-sufficient basis, failed to solve the

county's waste disposal 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 on

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 that

speak for themselves, but "one of a number of possible rational

interpretations of an event that bristled with ambiguities and descriptive

challenges for the writer." Id. at 512 (internal quotation omitted). The

Court did not allow recovery for choice of language which, though perhaps

reflecting a misconception, represented "the sort of inaccuracy that is

commonplace in the forum of robust debate to which 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 stated

that we "will not make editorial judgments about specific word choice in

order to portray a plaintiff in the best possible light, particularly when

the `sting' of the implication . . . is still present when the full

chronology is laid out." Id. at 1306. 
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Contrary to ABC's interpretation, the 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, 463

N.W.2d at 14. The court used the exact words of the broadcast in

submitting the question of falsity to the jury. The jury returned a

general verdict in Lundell's favor, requiring it to find that the statement

was false. The sting of the broadcast is the heart of the matter in

question -- the hurtfulness of the utterance. Jones, 440 N.W.2d at 891

(quoting Behr, 414 N.W.2d at 342). If the underlying 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 are

the subject of a reasonable dispute, whether the statement goes to the

operability of the machine, or its economic shortcoming. When the language

used 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" meant

only that the machine did not operate in a financially viable manner is not

expressly included in the story itself. Although Stallings said the

machine worked and Chase later discussed the financial aspect of the

machine, the story, as a whole, never clarified the original statement that

the machine "does not work." The statement is not nearly as ambiguous as

the statements in Bose Corporation or Janklow. The phrase "does not work"

is specific and is not the sort of inaccuracy that is "commonplace in the

forum of robust debate." Masson, 501 U.S. at 514 (quoting Bose Corp., 466

U.S. at 513). We, therefore, 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 could

conclude that the statement was false, and from which a reasonable jury

could conclude that the sting of the story was that
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the Lundell machine was mechanically inoperable. After carefully examining

the videotape, we are satisfied that a reasonable 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 inoperable. 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 that the machine was broken. Chase initiated the story after

reading an article in the Atlanta Journal- Constitution concerning the

Berrien County facility and local government revenue bond financing. The

article stated that the facility had financial problems, but it did not

state that the Lundell machine did not work. Nevertheless, Chase prepared

a proposal for a news story about the situation in Berrien County, and her

proposal included the statement that the recycling machine "has never

worked." Chase acknowledged at trial that she had not interviewed anyone

with knowledge of the Berrien County facility before making her story

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, and

this was one reason why she reported that the machine did not work. David

Gaskins, the former plant manager for the Berrien County Resource Recovery

facility, testified that the entire system, including the main shredder,

was operable at the time ABC prepared its report. Others corroborated this

testimony. 

Before airing the story, Chase contacted Vernon Lundell. Lundell

told Chase that the Lundell system in Berrien County worked, that

opposition to the system was political, and that he had stayed out of the

political dispute in Berrien County. A few days before the broadcast, Gary

Lamberson, an independent sales
-17-

representative for Lundell, contacted Chase and advised her that any story

on the Berrien County facility based on information provided only by local

political 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 operation of the system. Lamberson testified that Chase

left him with the impression that she was "too busy" to conduct further

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 prior to the broadcast. No

one from ABC ever asked Gaskins if the Lundell system was capable of

processing garbage. When the ABC camera crew came to the recycling plant,

one of the crew members remarked to Gaskins that he understood that the

plant was broken down. Gaskins responded that all he needed was some

garbage to process and "I'll fire it up." After ABC broadcast the story,

Lundell contacted ABC seeking a retraction. ABC responded with a letter

stating:

Contrary to your letter, the report does not state that

the "system" does not work. What the report does say is that

the garbage recycling machine 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 Natural

Resources has acted to close the facility down. 

This evidence amply demonstrates that ABC actually believed that its

broadcast stated that the machine was mechanically inoperable, and ABC does

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 argues 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 the broadcast was "of and concerning"

Lundell; and (2) that ABC violated the standard of care practiced

by professional journalists. We have carefully considered these

arguments and conclude there is substantial evidence to support the

jury's findings.

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false implication derived from the statement that the machine was

mechanically inoperable: (1) the report included footage showing the

machine operating; (2) the report noted that the machine did turn garbage

into fuel pellets and compost and showed fuel pellets made by the machine;

(3) the report included the express statement that "there's nothing

physically wrong with the machine. It's the people"; and (4) the report

showed footage of another Lundell machine operated by Tennessee officials.

These other parts of the story do not change our conclusion. The

2

report did not actually show the machine operating, but only included

footage showing a worker sorting garbage and fuel pellets made by the

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 machine was supposed to work like this one in

Tennessee, sorting and recycling up to ninety percent of the

county's garbage and paying for itself by selling the recycled

materials and charging user fees. That is how thencommissioner Joe Stallings promised it would work here. It did

not. 

A reasonable jury could easily conclude from Chase's comparison of the

Berrien County machine with the Tennessee machine that the Tennessee

machine worked, and the Berrien County machine did not. Cf. Treutler v.

Meredith Corp., 455 F.2d 255, 258 (8th Cir. 1972). Although Stallings

stated that there was nothing physically wrong with the machine, a

reasonable juror could discredit the statement, as the story painted

Stallings as someone who had misrepresented the machine to the Berrien

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 the

jury's finding of a false statement, making the district court's entry of

judgment for ABC erroneous. We reverse the district court's entry of

judgment for ABC as a matter of law. 

B.

ABC argues in the alternative that the district court's ruling may

be upheld because Lundell is a public figure for the purpose of this

action, and did not prove actual malice as defined in New York Times.

The determination of a plaintiff's status as a private or public

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 to

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 and

influence," and of "such pervasive fame or notoriety," that he

or she may be considered "a public figure for all purposes and

in all contexts." The second, more common, type of public

figure is the "limited purpose" public figure. The court

defined this type as a person who voluntarily injects himself

or are drawn into a particular 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 action

of his own, but the instances of truly involuntary public figures must be

exceedingly rare." Id. at 345. In determining whether an individual

should be considered a limited public figure, we must focus our attention

on the "nature
-20-

and extent of an individual's participation in the particular controversy

giving rise to the defamation." Gertz, 418 U.S. at 352. By so doing, we

then can determine whether the individual has voluntarily and purposefully

injected himself into that controversy in an attempt to influence the

resolution of the controversy. Id. at 345.

Applying these factors, we must first 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 the

garbage disposal problem in Berrien County. This controversy is clearly

a public controversy involving questions of "public concern." See Dun &

Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 761-62 (1985)

(plurality opinion); Waldbaum v. Fairchild Publications, Inc., 627 F.2d

1287, 1296-97 (D.C. Cir.) (defining a public controversy as one raising

issues that might reasonably be expected to have an impact beyond the

parties directly enmeshed in the particular controversy), cert. denied, 449

U.S. 898 (1980); Johnson v. Nickerson, 542 N.W.2d 506, 511 (Iowa 1996)

(same).

After identifying the particular controversy giving rise to the

defamation, we then examine the "nature and extent" of Lundell's

involvement. Bagley, 797 F.2d at 645. This inquiry is necessary to

determine whether Lundell has "thrust [itself] to the forefront of [this]

particular public controvers[y] in order to influence the resolution of the

issues involved." Gertz, 418 U.S. at 345.

The Supreme Court faced a situation very similar to this case in

Hutchinson v. Proxmire, 443 U.S. 111 (1979). Hutchinson 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 lower

court rulings that Hutchinson was a public figure, id. at 133-36. The

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 human

behavior. Id. at 135. "To the extent the subject of his published

writings became a matter of controversy, it was a consequence of the Golden

Fleece Award." Id. The Court emphasized that, "those charged with

defamation cannot, by their own conduct, create their own defense by making

the claimant a public figure." Id. The Court also reasoned that

Hutchinson did not "thrust himself or his views into public controversy to

influence others," and at most, the public controversy consisted of

concerns about general public expenditures. Id. The Court rejected the

arguments that Hutchinson's applications for and receipt of federal grants

and publications in professional journals elevated him to public figure

status. Id. The Court's determination was also influenced by the fact

that Hutchinson's only access to the media was limited to responding to the

announcement of the Golden Fleece award, and that Hutchinson did not have

regular and continuing access to the media, one of the accouterments of

being a public figure. Id. at 136. 

The Supreme Court also reversed lower 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 as

being a Soviet agent. Id. at 159. Sixteen years before the book's

publication, Wolston had received newspaper coverage because he had failed

to comply with a grand jury subpoena and had been subject to contempt

proceedings. Id. at 162-63. Although Wolston's decision not to appear

before a grand jury was likely to attract media attention, the Court

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 the press, and limited his involvement to defending the contempt

charges. Furthermore, Wolston did not fail to appear in order to influence

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 accurate to say that [Wolston]

was dragged unwillingly into the controversy." Id. at 166. "A private

individual is not automatically transformed into a public figure just by

becoming involved in or associated with a matter that attracts public

attention." Id. at 167. "A libel defendant must show more than mere

newsworthiness to justify application of the demanding burden of New York

Times." Id. at 167-168.

Lundell's status mirrors that of Hutchinson. Lundell did not inject

itself into the Berrien County controversy. See Bagley, 797 F.2d at 645-

46. Cf. National Found. for Cancer Research, Inc. v. Council of Better

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 any

evidence from any source that [Lundell] had attempted to inject [itself]

into [the] political debate of Berrien County." Although Lundell

contracted with the county for the sale of the machine, the Supreme Court

makes clear in Hutchinson and Wolston that it is the plaintiff's role in

the controversy, not the controversy itself, that is determinative of

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

concern, we focus on Lundell's role in the controversy, not the public

nature of the controversy itself. ABC does not direct us to any evidence

that Lundell placed itself into the controversy to influence the issues

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 its own defense by making Lundell a public figure. Like the

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 attacks the award of damages on several grounds. First, ABC

contends that Lundell cannot recover separate damages for reputational harm

and lost profits. Second, ABC contends Lundell failed to prove actual

damages and lost profits. The district court instructed the jury to

consider three different types of loss: damage to reputation, past lost

profits, and future lost 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 Martin Marietta Corp. v. Evening Star Newspaper Co., 417 F.

Supp. 947 (D.D.C. 1976), ABC argues that a corporation cannot recover for

both lost profits and injury to reputation. 

The law of libel has long reflected the distinction

between corporate and human plaintiffs by limiting corporate

recovery to actual damages in the form of lost profits . . .

"Although a corporation may maintain an action for libel, it

has no personal reputation and may be libeled only by

imputation about its financial soundness or business ethics."

Id. at 955 (quoting Golden 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 reputation 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 also reject ABC's argument that there is insufficient proof of

actual damages. Vernon Lundell testified that Lundell began operating in

1945 and had always had an excellent reputation in the industry and in

Iowa. Another witness testified that just before the broadcast, Lundell

was the industry leader for this type of equipment. Several witnesses

testified that after the broadcast, interest in the machine vanished. It

is undisputed that Lundell never sold another machine following the

broadcast. This evidence is more than sufficient to sustain the jury's

finding that Lundell was damaged by the story. There is also competent

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

million dollars in the development of the recycling system, constitutes

competent evidence of the dollar value of the injury. See id. 

3

 

B.

ABC contends that even if we reverse the district court's entry of

judgment, we must affirm the court's alternative ruling that Lundell failed

to prove lost profits resulting from the broadcast. ABC contends that in

order to recover lost profits, Lundell must identify the sales it lost

because of the report.

Lundell contends that the district court can only reverse the jury

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

reviewing a ruling on a motion for a new trial on the ground that the

verdict is against the weight of the evidence with the standard for

reviewing a ruling on a motion for judgment as a matter of law. Id. at

779-80. Here, the district court entered judgment as a matter of law

because there was a lack of evidence of lost profits. Accordingly, our

standard of review is whether there is sufficient evidence to support the

verdict, not whether the verdict is against the great weight of the

evidence. See id.

The level of proof required to establish the exact amount of lost

profits is not as high as the level of proof required to establish that

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 between proof of the

fact that damages have been sustained and proof of the amount

of those damages. If it is speculative and uncertain whether

damages have been sustained, recovery is denied. If the

uncertainty lies only in the amount of damages, recovery may be

had if there is proof of a reasonable basis from which the

amount can be inferred or approximated.

Id.

The Iowa Supreme Court has rejected the argument that a plaintiff

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 is

sufficient to support an award for lost profits so long as the record

discloses a reasonable basis from which the amount can be inferred or

approximated. Id. "Simply because the loss of profits cannot be shown

with precision, defendant who caused the damages, may not be heard to say

that no damages may be awarded." Orkin, 160 N.W.2d at 430 (quoting

Exercycle of Mich. Inc. v. Wayson, 341 F.2d 335, 337 (7th Cir.
-26-

1965)).

The district court set aside the lost profits award for two reasons.

First, it concluded that there were "tremendous problems" with the machines

sold by Lundell, and that Lundell had to take back most machines it sold

through litigation or otherwise. Second, the court concluded that

Lundell's evidence concerning lost sales was inconsistent. Vernon Lundell

testified that Lundell would have sold over twenty systems in the two years

following the story. Vernon Lundell's son-in-law and vice-president of the

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 calculating

lost profit damages. The jury was free to accept or reject the opinion of

either one of these witnesses. 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 other

evidence to support the lost profits award. First, there was evidence that

before the report there was substantial interest in the Lundell machine,

and following the report, 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 profit

of approximately $240,000. The historical sales figures for the years

preceding the story also provide a reasonable basis for approximating lost

profits damages. Indeed, Lundell earned $158,000 in 1987 on sales of over

$1.5 million, representing the sale of one machine. 

Furthermore, the issue of whether the machines had "tremendous

problems" was conflicting. 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 problems

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 an award

of lost profits. We reverse the district court's alternative ruling

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 jury

verdict for Lundell and award of damages for Lundell, including damages for

lost profits.

 A true copy.

Attest:

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