                      United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                     ___________

                                     No. 02-2841
                                     ___________

Richard P. Landers,                    *
                                       *
      Plaintiff - Appellant,           *
                                       * Appeal from the United States
      v.                               * District Court for the
                                       * District of Minnesota.
National Railroad Passenger            *
Corporation, doing business as Amtrak, *
                                       *
      Defendant - Appellee.            *
                                 ___________

                              Submitted: May 13, 2003

                                   Filed: September 30, 2003
                                    ___________

Before LOKEN, Chief Judge, BRIGHT and MURPHY, Circuit Judges.
                              ___________

LOKEN, Chief Judge.

       After rating the performance of its managers, Amtrak terminated the lowest-
rated ten percent, including Richard P. Landers, a Service Manager for the Empire
Builder line. Landers commenced this lawsuit in Minnesota state court, asserting
state law claims for defamation, breach of a term of employment contained in a
superseded Amtrak employee policy, and disability discrimination. Amtrak removed
the diversity case to federal court. Prior to trial, the district court limited Landers’s
defamation claim and granted summary judgment dismissing his breach of contract
and disability discrimination claims. Following trial of the defamation claim, the jury
returned a verdict for Amtrak, finding false statements but no actual malice. Landers
appeals, challenging the court’s pretrial rulings and its actual malice jury instruction.
Concluding the district court1 committed no error of Minnesota law, we affirm.

                                I. Defamation Issues.

       On appeal, Landers raises two issues relating to the last claim pleaded in his
multi-count complaint, defamation. This claim arises out of the performance review
that implemented Amtrak’s decision to terminate ten percent of its managers.

       To arrive at an overall numerical performance rating, Amtrak gave each
manager a rating from “1” to “7” in seven job performance categories. Product Line
Director Gary Erford, Landers’s immediate supervisor, initially recommended
numerical ratings for Landers and four other managers under Erford’s supervision.
Erford recommended that Landers receive four 7’s and three 3’s. Erford’s ratings
were subject to revision by a secondary reviewer, whose task was to ensure consistent
ratings across the entire business group. Joy Smith, General Manager of Amtrak’s
Western Business Group, performed the secondary reviews. She lowered Erford’s
recommended ratings for all five managers. For Landers, Smith reduced the final
ratings to five 3’s and two 2’s, rating Landers at level “2” in the categories of safety
and financial resources. Smith’s final ratings put Landers in the bottom ten percent
of all managers, resulting in his termination.

       Landers alleges that performance ratings of “2” and “3” were false and
defamatory. Amtrak’s internal Job Performance Form defined level “2” as “Rarely
met expectations” and level “3” as “Met expectations; partially achieved goals.” The
district court ruled that a rating of “3” could not reasonably be construed as


      1
        The HONORABLE PAUL A. MAGNUSON, United States District Judge for
the District of Minnesota.

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defamatory. Accordingly, the court instructed the jury that “the only two statements
you may find were defamatory were the ratings Mr. Landers received in . . . safety
and financial resources.” The jury found that those ratings were false and defamatory
but returned a verdict for Amtrak because Landers failed to prove actual malice.

                                         A.

        Landers first argues that the district court erred in granting partial summary
judgment dismissing his claim that the “3” ratings were defamatory. This contention
reflects a misunderstanding of Minnesota defamation law. The district court did not
grant summary judgment on a fact issue. Rather, the court decided a threshold issue
of law. Under Minnesota law, defamatory statements include those that tend to injure
the plaintiff’s reputation. In deciding whether a statement was defamatory, “[w]ords
may be divided into those that cannot possibly have a defamatory meaning; those that
are reasonably susceptible to a defamatory meaning as well as an innocent one; and
those that are clearly defamatory on their face.” Church of Scientology of Minn. v.
Minn. State Med. Ass’n Found., 264 N.W.2d 152, 155 (Minn. 1978). While the
question whether a statement may reasonably be construed as defamatory is fact
intensive, the Supreme Court of Minnesota has held that the analysis begins with an
issue of law for the trial judge:

      The question whether a claimed defamatory innuendo is reasonably
      conveyed by the language used is for the court to determine. If the
      words are capable of the defamatory meaning, it is for the jury to decide
      whether they were in fact so understood.

Utecht v. Shopko Dep’t Store, 324 N.W.2d 652, 653-54 (Minn. 1982) (citations
omitted), followed in Kellar v. VonHoltum, 568 N.W.2d 186, 191 (Minn. App. 1997).




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       In this case, the district court determined as a matter of law that giving Landers
a performance rating of “3” may not reasonably be construed as conveying a
defamatory meaning. After careful de novo review of the trial record, we agree.
Those who understood the Amtrak performance review process knew that a “3”
meant Landers “met [employment] expectations [and] partially achieved
[employment] goals.” Declaring that an employee has performed satisfactorily cannot
harm his reputation and therefore is not defamatory. As the district court recognized,
impact on reputation is the relevant defamation inquiry, not whether Landers’s
satisfactory job performance ratings resulted in his termination because other
employees were rated more highly. The tort of defamation is distinct from the
question whether Landers was wrongfully discharged. The district court properly
declined his invitation to collapse these two distinct inquiries.

                                          B.

       Landers next argues that the district court erred in instructing the jury that
Landers must prove actual malice. Under Minnesota law, an employer has a qualified
privilege to make a defamatory statement “on a proper occasion, with a proper
motive, and based on reasonable or probable cause.” Scott Fetzer Co. v. Williamson,
101 F.3d 549, 555 (8th Cir. 1996); see Hebner v. Great N. Ry., 80 N.W. 1128, 1129
(Minn. 1899). The existence of a qualified privilege is a question of law for the court.
Lewis v. Equitable Life Assurance Soc’y, 389 N.W.2d 876, 890 (Minn. 1986).
However, if the facts are disputed, the issue of whether the declarant had reasonable
or probable cause to make the defamatory statement may be submitted to the jury, in
which case “[t]he court then factors that factual finding into its legal determination
of whether an employer enjoys a qualified privilege.” Wirig v. Kinney Shoe Corp.,
461 N.W.2d 374, 380 n.4 (Minn. 1990). If the court determines the employer is
entitled to a qualified privilege, then the defamation plaintiff must prove the employer
abused its privilege by acting with actual malice. Lewis, 389 N.W.2d at 890.



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       In this case, Landers does not challenge the district court’s phrasing of the
actual malice instruction. Rather, he argues the instruction was improper because
Smith’s “2” ratings were not based upon reasonable or probable cause, and therefore
Amtrak was not entitled to the qualified privilege defense. This issue was not
properly preserved at trial. In responding to Amtrak’s motion for judgment as a
matter of law at the close of Landers’s case, he admitted “that Joy Smith may have
had a qualified privilege” but argued she acted with actual malice. Then, at the
instructions conference, Landers objected to the actual malice instruction only on the
ground that “the defamatory statements were made to individuals who did not have
a need to know what those ratings would be.” Because Landers did not argue to the
district court that Smith’s defamatory ratings were made without reasonable or
probable cause, and did not request that the jury make a finding to that effect, we
review the district court’s resolution of this issue of law for plain error. See Kehoe
v. Anheuser-Busch, Inc., 96 F.3d 1095, 1104 (8th Cir. 1996).

      At trial, General Manager Smith described in detail the data she considered and
the analysis she made before giving Landers “2” ratings in the safety and financial
resources categories. The district court did not commit plain error in concluding that
Smith had reasonable or probable cause for these ratings, even if in hindsight they
proved to be false. Therefore, Amtrak was entitled to the qualified privilege defense,
and the court properly gave an actual malice instruction.

                       II. The Breach of Contract Claim.

      In Count I of his complaint, Landers alleged that Amtrak breached his
employment contract by failing to follow the progressive discipline procedures
prescribed in Amtrak’s 1981 personnel policy. The district court granted summary
judgment dismissing this claim because the last pre-termination Amtrak policy
expressly superseded all prior policies and included a disclaimer negating any binding



                                         -5-
contractual effect. We review the grant of summary judgment de novo. Mercer v.
City of Cedar Rapids, 308 F.3d 840, 843 (8th Cir. 2002).

       Under Minnesota law, a progressive discipline policy described in an employee
handbook constitutes a binding term of employment if it is definite in form,
communicated to the employee, and accepted with consideration given. See Feges
v. Perkins Rests., Inc., 483 N.W.2d 701, 707 (Minn. 1992). We have construed this
doctrine as precluding an employee from claiming contract rights under a handbook
or policy document that expressly disclaims the creation of a binding contract. Miller
v. Citizens Sec. Group, Inc., 116 F.3d 343, 348-49 (8th Cir. 1997). Thus, when an
employee policy declares the employer’s intent to revoke the prior policy and
includes an express disclaimer, it precludes a breach of contract claim based upon the
prior policy by an employee who received the new policy and accepted it by
continuing his employment. See Brown v. Tonka Corp., 519 N.W.2d 474, 477 n.2
(Minn. App. 1994), construing Feges, 483 N.W.2d at 707, Pine River State Bank v.
Mettille, 333 N.W.2d 622 (Minn. 1983), and Lewis, 389 N.W.2d at 883.

      Amtrak distributed a new personnel policy two weeks before Landers was
terminated. Landers argues the district court erred in granting summary judgment
because whether the new policy was communicated to him and whether there was
adequate consideration for this change in policy are disputed fact issues for the jury.
However, Landers testified at his deposition that he received the new policy before
termination, understood that it superseded older policies, and continued to work for
Amtrak. Given these admissions, the district court properly granted summary
judgment dismissing the breach of contract claim.

                    III. The Disability Discrimination Claim.

      In Count II of his Complaint, Landers alleged that Amtrak discriminated
against him on account of a disability, Bell’s palsy. Landers contracted Bell’s palsy

                                         -6-
in December 1996. He suffered substantial facial paralysis and material impairment
of several major life activities for approximately one year. Nerve decompression
surgery improved his condition, and by June 1998 Landers had regained 70 to 80
percent of his facial functioning. Noting that Landers failed to present evidence
showing material impairment of his major life activities at the time of his termination
in March 2000, and that he was fully able to perform his job at Amtrak after the onset
of Bell’s palsy, the district court granted summary judgment dismissing this state law
claim on the ground that Landers was not a “disabled person,” that is, one who “has
a physical, sensory, or mental impairment which materially limits one or more major
life activities.” MINN. STAT. § 363.01, subd. 13(1).

       On appeal, Landers argues that the district court erred in granting summary
judgment on this ground because there was evidence showing that, more than four
years after he contracted Bell’s palsy, he still suffered from facial twitching, an
inability to completely open his mouth, and a limited field of vision in his left eye.
We agree with the district court that this evidence failed to demonstrate that his
impairments, however unpleasant, materially limit one or more major life activities.
Landers’s condition did not interfere with eating or drinking (other than requiring
smaller mouthfuls), and his work performance was unaffected, according to his own
assessment. In these circumstances, summary judgment dismissing this claim was
proper. Compare Sigurdson v. Carl Bolander & Sons, Co., 532 N.W.2d 225, 229
(Minn. 1995) (summary judgment affirmed because plaintiff failed to show that
diabetes “materially limited his ability to obtain and retain employment”), with
Hoover v. Norwest Private Mortgage Banking, 632 N.W.2d 534, 544 (Minn. 2001)
(summary judgment reversed because plaintiff presented evidence that “fibromyalgia
materially limited her ability to work”).

      The judgment of the district court is affirmed.
                     ______________________________



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