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DeRosa v. McKenzie

Supreme Court of Minnesota

December 11, 2019

William DeRosa, Appellant,
v.
Craig M. McKenzie, Respondent.

          Court of Appeals Office of Appellate Courts

          John B. Williams, Williams Lopatto PLLC, Washington, D.C.; and Courtney R. Sebo Savica, Wendland Utz, Ltd., Rochester, Minnesota, for appellant.

          K. Jon Breyer, Leland P. Abide, Kutak Rock LLP, Minneapolis, Minnesota, for respondent.

         SYLLABUS

         1. A corporate officer who did not author a defamatory statement, but participated in the publication of the statement, may be held personally liable for defamation.

         2. The pleadings provided sufficient notice to a corporate officer of the defamation claim against him in his personal capacity for his participation in the commission of a tort to survive a motion to dismiss for failure to state a claim upon which relief can be granted.

          OPINION

          McKEIG, Justice.

         This appeal requires us to consider whether corporate officers may be personally liable for participating in the intentional tort of defamation. Appellant William DeRosa brought this defamation action against respondent Craig McKenzie, the chief executive officer of Dakota Plains Holdings, Inc. DeRosa's complaint alleges that McKenzie authorized, directed, and approved defamatory statements about DeRosa in a Dakota Plains press release more than a year after DeRosa left the Dakota Plains Board of Directors. We hold that a corporate officer who did not author a defamatory statement, but participated in the publication of the statement, may be held personally liable for defamation. Because we conclude DeRosa's complaint sufficiently alleges participation in the publication of a defamatory statement, the district court's dismissal of the complaint on the pleadings was erroneous. We therefore reverse the decision of the court of appeals and remand this matter to the district court to reinstate DeRosa's Second Amended Complaint and for further proceedings consistent with this opinion.

         FACTS[1]

         In 2014, Lone Star Value Management, a substantial equity owner of Dakota Plains, appointed William DeRosa to the Board of Directors of Dakota Plains. DeRosa's appointment was "poorly received" by Craig McKenzie, the chief executive officer and chairman of Dakota Plains. Within two months of DeRosa's appointment, McKenzie accused DeRosa of "immaturity," and a "lack of understanding," and complained that DeRosa's insistence on proper board procedures was "becoming a distraction." In February 2015, McKenzie accused DeRosa of violating the bylaws of Dakota Plains by sharing confidential information about Dakota Plains with Lone Star. At Lone Star's request, DeRosa resigned the next day. Dakota Plains commenced a lawsuit against DeRosa in Nevada, accusing him of breaching his fiduciary duties to Dakota Plains.

         Approximately one year later, while the Nevada action was still pending, Dakota Plains issued a press release at McKenzie's direction and with his approval. The press release stated:

Mr. DeRosa . . . violated his fiduciary duties to all stockholders and committed unlawful acts by sharing material non-public information. Mr. DeRosa resigned from the Board because of this breach of fiduciary duty and will stand trial in court for his actions later this year.

         There is no dispute that the press release was published. After publication, McKenzie republished the press release by authorizing the attachment of the press release to an 8-K filing with the Securities and Exchange Commission.

         In response, DeRosa commenced an action against McKenzie in New Jersey for defamation and intentional infliction of emotional distress, which was dismissed for lack of personal jurisdiction. DeRosa then commenced an action against McKenzie in Minnesota, raising the same claims. The district court granted McKenzie's motion to dismiss for failure to state a claim, but provided DeRosa ...


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