Case Name: Loren J. ZUTZ, et al., Appellants, v. John NELSON, et al., Respondents
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 2010-09-09
Citations: 788 N.W.2d 58
Docket Number: No. A08-1764
Parties: Loren J. ZUTZ, et al., Appellants, v. John NELSON, et al., Respondents.
Judges: ANDERSON, PAUL H., J., dissenting.
Reporter: North Western Reporter 2d
Volume: 788
Pages: 58–76

Head Matter:
Loren J. ZUTZ, et al., Appellants, v. John NELSON, et al., Respondents.
No. A08-1764.
Supreme Court of Minnesota.
Sept. 9, 2010.
Paul A. Sortland, Sortland Law Office, Minneapolis, MN, for appellants.
Lindsay G. Arthur, Jr., Beth Jenson Prouty, Arthur, Chapman, Kettering, Sme-tak & Pikala, P.A., Minneapolis, MN, for respondents.

Opinion:
OPINION
ANDERSON, G. BARRY, Justice.
This case involves the level of privilege from defamation liability applicable to subordinate government bodies such as water shed district boards. All four parties are board members of the Middle Snake Ta-marac Rivers Watershed District in northwestern Minnesota. While serving as board members, Loren J. Zutz and Elden J. Elseth conducted an investigation regarding alleged improprieties in the watershed district's payroll practices. Fellow board members John Nelson and Arlyn Stroble believed that the actions of Zutz and Elseth were inappropriate and in violation of the law. Both Nelson and Stroble allegedly made statements to that effect at a 2007 watershed district meeting, and Zutz and Elseth then brought this action against Nelson and Stroble for defamation. The Marshall County District Court granted Nelson and Stroble's motion for judgment on the pleadings, holding that as board members, they were protected by an absolute legislative privilege. Zutz and Elseth appealed, and the court of appeals affirmed in an unpublished decision. Zutz v. Nelson, No. A08-1764, 2009 WL 1752139 (Minn.App. June 23, 2009). Because we hold that members of watershed district boards are entitled to only a qualified, rather than an absolute, privilege, we reverse and remand.
A watershed district is a special-purpose unit of local government created by statute "[t]o conserve the natural resources of the state by land use planning, flood control, and other conservation projects." Minn. Stat. § 103D.201, subd. 1 (2008). Watershed districts are established for various specific purposes serving those ultimate goals, including controlling flood waters, diverting watercourses, providing and conserving water supply, regulating the use of ditches and watercourses, regulating improvements by riparian property owners, and providing hydroelectric power, among others. Minn.Stat. § 103D.201, subd. 2 (2008). Watershed districts have extensive authority at their disposal in order to accomplish these goals. For example, districts may acquire dams, dikes, reservoirs, water supply systems, and real and personal property by exercising the power of eminent domain or by other means. Minn. Stat. § 103D.335, subds. 1(3), 9, 11 (2008).
Each watershed district in Minnesota is operated by a board of managers. The county commissioners of the counties served by the watershed district appoint the managers, who serve three-year terms. Minn.Stat. § 103D.311, subd. 2, 103D.315, subd. 6 (2008). Board members of watershed districts take an oath that applies to Executive Department officers, Minn.Stat. § 103D.315, subd. 1 (2008), but also act in a quasi-legislative capacity. The Middle Snake Tamarac Rivers Watershed District's board has seven members, six of whom are appointed by the Marshall County commissioners. The seventh member is appointed by the Polk County commissioners.
The Middle Snake Tamarac Rivers Watershed District is one of 45 watershed districts in Minnesota. The district is located in northwestern Minnesota, primarily in Marshall County, and covers the natural watershed areas of the Middle, Snake, and Tamarac Rivers. All three rivers are tributaries of the Red River.
Watershed district boards hire employees to facilitate "the works and improvements undertaken by the district." Minn. Stat. § 103D.325, subd. 3 (2008). In the course of their activities as members of the district's board, plaintiffs Zutz and Elseth became concerned about payments to various district employees. They made inquiries at the district's bank, and obtained certain bank records in response to their inquiries.
At a district board meeting on June 18, 2007, two other board members, defendants Nelson and Stroble, allegedly accused Zutz and Elseth of violating the Minnesota Government Data Practices Act by making inquiries and obtaining the records from the bank. Specifically, in response to a question about whether Zutz and Elseth violated the Minnesota Government Data Practices Act, Zutz and Elseth allege that Nelson stated: "I don't think there is much question that he did." Nelson also allegedly said, "Laws are being broken by Board Members — enough is enough!" The implication of that statement was allegedly that Zutz and Elseth had violated Minnesota law. Zutz and El-seth also allege that at the same meeting, Stroble said, "Why should we provide legal counsel for actions that are against the law?" implying that Zutz and Elseth had engaged in unlawful activities.
Zutz and Elseth brought an action against Nelson and Stroble for defamation. Nelson and Stroble raised several affirmative defenses and moved for judgment on the pleadings. The district court granted the motion and dismissed the complaint on the ground that an absolute legislative privilege protected Nelson and Stroble from defamation claims.
Zutz and Elseth appealed, arguing that Minnesota law does not extend absolute privilege to subordinate bodies such as watershed district boards. The court of appeals affirmed the district court's judgment in an unpublished opinion. Zutz v. Nelson, No. A08-1764, 2009 WL 1752139, at *2 (Minn.App. June 23, 2009). We granted review on one legal issue: whether the doctrine of absolute legislative privilege applies to allegedly defamatory statements made by members of a subordinate public body, such as the board of the Middle Snake Tamarac Rivers Watershed District.
The district court granted Nelson and Stroble's motion for judgment on the pleadings under Minnesota Rule of Civil Procedure 12.03 and dismissed Zutz and Elseth's complaint. We have said that "judgment on the pleadings is proper where the defendant relies on an affirmative defense or counterclaim which does not raise material issues of fact." Jacobson v. Rauenhorst Corp., 301 Minn. 202, 206, 221 N.W.2d 703, 706 (1974), overruled on other grounds by Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc., 281 N.W.2d 838 (Minn.1979). On appeal from such a dismissal, we consider only the facts alleged in the complaint, accepting those facts as true and drawing all reasonable inferences in favor of the nonmoving party. Hoffman v. N. States Power Co., 764 N.W.2d 34, 45 (Minn.2009). We review de novo whether "the complaint sets forth a legally sufficient claim for relief." Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn.2003).
Two categories of privilege exist as defenses against defamation claims— absolute privilege and conditional or "qualified" privilege. Both types of privilege are broadly recognized across the United States, and generally "result[] from the court's determination that statements made in particular contexts or on certain occasions should be encouraged despite the risk that the statements might be defamatory." Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d 876, 889 (Minn.1986). The Restatement (Second) of Torts explains that absolute and qualified privileges are both "based upon a policy that treats the ends to be gained by permitting defamatory statements as outweighing the harm that may be done to the reputation of others." Restatement (Second) of Torts ch. 25, topic 2, tit. B Introductory Note, at 242-43 (1977). Absolute and qualified privileges cover statements made by many categories of public officials, and have the purpose of making officials "as free as possible from fear that their actions in [their] position[s] might" subject them to lawsuits for defamation. Id. at 243. An absolute privilege applies without regard to the intent of the speaker, but a qualified privilege requires a determination of the speaker's mental state. We have defined the difference between the two kinds of privileges by stating that "[a]bsolute privilege means that immunity is given even for intentionally false statements, coupled with malice, while a qualified or conditional privilege grants immunity only if the privilege is not abused and defamatory statements are publicized in good faith and without malice." Matthis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 416 (1954).
Nelson and Stroble argue that their alleged statements should be covered by absolute legislative privilege. Zutz and Elseth assert that Nelson and Stroble may claim the benefit of only a qualified privilege, and therefore may avoid liability for defamatory statements only by showing their good faith and lack of malice. See Matthis, 243 Minn. at 223, 67 N.W.2d at 416.
Absolute privilege is not lightly granted and applies only in limited circumstances. The Minnesota Constitution grants absolute privilege from defamation liability to members of the State Senate and House of Representatives in the discharge of their official duties. Minn. Const, art. IV, § 10. We have extended this absolute privilege, as a matter of public policy, to some other government officials in certain contexts. E.g., Bauer v. State, 511 N.W.2d 447, 450 (Minn.1994) (acknowledging the extension of absolute privilege to government officials acting in judicial or quasi-judicial capacities); Johnson v. Dirkswager, 315 N.W.2d 215, 223 (Minn.1982) (extending absolute privilege to Commissioner of Public Welfare in the performance of his official duties as a "top-level cabinet-type" official). But we have consistently declined to extend absolute privilege to all government officials. E.g., Bauer, 511 N.W.2d at 450 (declining to extend absolute privilege to mid-level state employees acting in their official capacities); Jones v. Monico, 276 Minn. 371, 375, 150 N.W.2d 213, 215-16 (Minn.1967) (declining to extend absolute privilege to a member of a county board). While our jurisprudence on the extension of the absolute privilege has not been a model of clarity, our precedent most relevant to the present dispute points us to qualified rather than absolute privilege.
We have declined to extend absolute privilege from defamation liability to members of subordinate elected government bodies such as city councils and county boards. In Burch v. Bernard, we declined to extend absolute privilege to a city council member who, pursuant to business before an ongoing city council meeting, accused a nurse employed by the city of "running nothing but a damn whorehouse." 107 Minn. 210, 211, 120 N.W. 33, 33 (1909). We analyzed the issue under a qualified privilege standard, stating that for the privilege to apply a city council member must make the challenged statement " 'in good faith and in the honest belief that [it is] true.' " Id. at 212, 120 N.W. at 34 (quoting Quinn v. Scott, 22 Minn. 456, 462 (1876)). In Jones v. Monico, we reasserted our holding in Burch by declining to extend the absolute privilege to members of a county board accused of making defamatory statements during board proceedings. 276 Minn. 371, 375-76, 150 N.W.2d 213, 216 (1967). We flatly con- eluded that "subordinate bodies, including municipal councils or town meetings, are not within the policy underlying absolute immunity since the members of such bodies are sufficiently protected by exemption from liability in the exercise of good faith." Id. at 375, 150 N.W.2d at 216. In other words, we held that a qualified, not absolute, privilege from defamation liability applies to subordinate bodies such as city councils or county boards.
We are "extremely reluctant to overrule our precedent under principles of stare decisis " and "require a compelling reason" to do so. State v. Martin, 773 N.W.2d 89, 98 (Minn.2009) (citation omitted) (internal quotation marks omitted). While we are mindful that stare decisis "does not bind [our court] to unsound principles," Oanes v. Allstate Ins. Co., 617 N.W.2d 401, 406 (Minn.2000), the reasoning underlying the holdings in Burch and Jones is not unsound, and there is no compelling reason to overturn those cases.
Given our refusal to extend an absolute privilege to elected city councils or county boards, we see no reason to extend absolute privilege to appointed watershed district boards. Thus, in keeping with our holdings in Burch and Jones, we decline to extend absolute privilege here.
But we need not here decide the issue of whether to extend an absolute privilege to city councils and county boards. We can decide this case on the much more limited issue of whether to grant absolute privilege to an unelected and even more subordinate government body — a watershed district board. That consideration extends to closely examining the public costs and benefits of expanding the doctrine of absolute immunity from defamation liability within the confines of the case before us.
"The doctrine of privileged communication rests in that of public policy." Matthis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 417 (1954). "It is peculiarly so in the case of absolute privilege, for in the case of a communication recognized as absolutely privileged even the presence of express malice does not destroy the privilege." Id. at 223, 67 N.W.2d at 417. Thus, we should keep the doctrine of absolute privilege "confined within narrow limits." Id. at 223, 67 N.W.2d at 417. The duty before our court, therefore, is to determine whether the public is best served by allowing the unelected members of a watershed district board protection from defamation liability even when they defame with malice. We conclude that limiting watershed district board members to a qualified privilege better serves the people of Minnesota.
Proponents of extending the absolute privilege to watershed district boards, including the dissent, make essentially three arguments for the absolute privilege. Proponents argue: (1) without the protection of the absolute privilege, fewer Minnesotans will volunteer for service on watershed district boards or similar civic posts; (2) without the protection of the absolute privilege, members of watershed district boards will be reticent to share important information at board meetings for fear of being sued for defamation; and (3) there is no reason why we should grant the absolute privilege for higher ranking government officials and not for lower ranking officials such as members of watershed district boards. These arguments are unconvincing.
We address the first and second arguments together as they are related. The dissent asserts the importance of watershed district boards, and stresses that these boards have extensive authority at them disposal in order to accomplish their goal of managing watersheds. We agree that watershed districts have substantial authority, including the power of eminent domain. We disagree, however, that extensive authority leads inexorably to an extension of absolute privilege. The dissent admits that we have never extended absolute privilege in Minnesota to subordinate bodies such as watershed district boards. Indeed the parties do not offer any evidence that since Burch v. Bernard, 107 Minn. 210, 120 N.W. 33 (1909), decided a century ago, Minnesota citizens have been unwilling to serve on city councils because council members receive only qualified as opposed to absolute privilege. Given this fact, it is not surprising that the dissent simply asserts, without proof, that absolute privilege is necessary to encourage volunteers to serve as members of unelected watershed district boards.
The dissent similarly asserts, without record evidence, that exposing members of watershed district boards to potential defamation claims will have a "chilling effect" that will not only result in an inability to attract qualified board members but that will also prevent those members who do volunteer from having candid deliberations at board meetings. Neither the parties to this case nor the dissent provides any evidence of a "chilling effect" associated with service on a board with a qualified privilege. We see no compelling need to extend the absolute privilege without any evidence that the qualified privilege is insufficient to protect members of watershed district boards.
Moreover, extending the absolute privilege to watershed district boards would come at a cost and strike the wrong balance between the competing interests of the public. The effect of absolute privilege is to immunize board members who engage in defamatory speech, speech that can be personally crushing and career-ending. Watershed district board members are appointed by county boards. So, unlike the State Legislature, or even a city council or county board, citizens who dislike the actions of watershed district boards cannot vote these members out of office. Nor can citizens necessarily vote out of office those who appointed watershed district board members.
Consider the example of a hypothetical watershed district facing an eminent domain issue which prompts a heated exchange between a citizen who does not want her property seized by the government and a district board member who wrongly impugns the character of the complaining citizen. It is one thing to say that the board member has a qualified privilege in connection with official district deliberations, and quite another to say that a district board member may attack the complaining citizen with express malice. A more persuasive argument can be made, perhaps, for extending absolute privilege to the deliberations of elected county and municipal bodies, in that the citizen damaged by the wrongful speech of the board member at least has the remedy of voting for someone else. But here, the watershed district board members are largely unaccountable to the public they serve. The dissent asserts that watershed district boards are susceptible to public scrutiny and criticism and are therefore accountable. Because there is no direct accountability to the voters for watershed district board members, we agree with the dissent that public criticism is the only vehicle for holding board members accountable. But this fact supports a qualified rather than absolute privilege, at least in the absence of proof of anything more than a theoretical problem. The damage from defamatory statements is real; public criticism of an unelected board member is hardly comparable.
Finally, the third argument proponents make for extending absolute privilege to watershed district boards is that there is no reason to draw a distinction between higher ranking legislative bodies and lower ranking bodies such as watershed district boards. The dissent supports this argument by reference to our decision in Carradine v. State, 511 N.W.2d 733 (Minn.1994). We disagree for two reasons. First, there is a reason to draw a distinction between elected and unelected bodies as discussed above. Additionally, the reasoning underlying this argument, taken to its logical conclusion, leads to absolute immunity for any and all appointed governmental boards, at least to the extent those boards have significant powers, and might very well extend to administrative employees serving in countless governmental bureaucracies. In the end, we conclude that judicial extension of the absolute privilege should occur only on the basis of sound evidence that a need exists.
Second, Carradine does not support the dissent's position. In Carradine we extended the absolute privilege from defamation liability to police officers for statements made in police reports. 511 N.W.2d at 736-37. We recognized that the public interest is served by extending the absolute privilege in some cases, but we did not simply announce a blanket rule that absolute privilege should extend to all government officials at all levels. Rather, we weighed the competing public policies relevant in that context and determined that, in the narrow case of a police officer's official report, the people of Minnesota are better served by extending the absolute privilege. Indeed, in Bauer v. State, a ease we decided contemporaneously with Carradine, we decided not to extend the absolute privilege to certain mid-level government employees. 511 N.W.2d 447, 450 (Minn.1994). We declined to extend the privilege because the specific facts and policy considerations in Bauer did "not raise public policy considerations of the same urgency as Carradine." Id. Bauer and Carradine both reassert the basic principle expressed in Matthis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 417 (1954), that we only extend the absolute privilege to government officials when public policy weighs strongly in favor of such extension.
For the reasons discussed above, we conclude that the people of Minnesota are better served by the application of a qualified, rather than absolute, privilege to members of watershed district boards. We therefore reverse the district court and remand this case for further proceedings consistent with this opinion.
Reversed and remanded.
ANDERSON, PAUL H., J., dissenting.
STRAS, J., not having been a member of this court at the time of the argument and submission, took no part in the consideration or decision of this case.
. The complaint states that "he" in this statement by Nelson referred to both Zutz and Elseth.
. We have also said, in dicta, citing a Massachusetts case and a now-antiquated legal treatise, that the "rule of general application in this country that libelous or slanderous matter published in the due course of . legislative proceedings is absolutely privileged" applies to "all legislative bodies, state or municipal." Peterson v. Steenerson, 113 Minn. 87, 89, 129 N.W. 147, 147-48 (1910). And in Jones, we created confusion by quoting the Peterson dicta. Jones, 276 Minn, at 374—75, 150 N.W.2d at 215-16. But we have not applied the Peterson dicta in later cases and have consistently applied qualified rather than absolute privilege to subordinate elected bodies such as city councils and county boards.
. The dissent also bases its position on a "diverse collection of authorities" that it asserts represents the "modem rule." All but one of the sources cited by the dissent, however, address the extension of the absolute privilege to duly elected city and county legislative bodies, which is not at issue in the case before us. Further, it is only the soundness of the reasoning underlying the sources that should concern us, not the perceived trend in those sources.
. For instance, as the dissent notes, Minnesota was listed among jurisdictions not extending absolute privilege to subordinate legislative bodies in the Restatement (Second) of Torts. See 5 Restatement (Second) of Torts app. § 590, Reporter's Note cmt. c (1981).
. The Legislature is, of course, free to extend the absolute privilege to the watershed district boards, which are a legislative creation. As a matter of public policy it is preferable that the Legislature determine whether an absolute privilege is needed to ensure the service of willing and qualified volunteers on these boards. To date, the Legislature has declined to extend absolute privilege to watershed district boards.
. The Middle Snake Tamarac Rivers Watershed District, at issue in this case, has six members appointed by the Marshall County Board of Commissioners and one member appointed by the Polk County Board of Commissioners. If a resident of Polk County living within the Middle Snake Tamarac Rivers Watershed District took issue with the actions of members of the watershed district board appointed by Marshall County, that resident would not be able to vote against those who appointed the offending watershed district board members.