                      United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 00-2658
                                   ___________

Ronald Keith Smith,                     *
                                        *
             Appellee,                  *
      v.                                * Appeal from the United States
                                        * District Court for the
Des Moines Public Schools,              * Southern District of Iowa
                                        *
             Appellant.                 *
                                   ___________

                             Submitted: April 9, 2001

                                  Filed: August 7, 2001
                                   ___________

Before McMILLIAN and LOKEN, Circuit Judges, and GOLDBERG,1 Judge.
                           ___________

McMILLIAN, Circuit Judge.

      Des Moines Independent Community School District ("the District") appeals
from a final judgment entered in District Court2 for the Southern District of Iowa,
following a jury verdict in favor of Ronald K. Smith, finding the District liable for
defamation. Smith v. Des Moines Public School System, No. 4-98-CV-90368 (S.D.


      1
       The Honorable Richard W. Goldberg, Judge, United States Court of
International Trade, sitting by designation.
      2
        The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa.
Iowa June 1, 2000). For reversal, the District argues that (1) the district court erred in
denying its motion for judgment as a matter of law because the allegedly defamatory
statements were true or substantially true, and (2) there was insufficient evidence for
a reasonable jury to conclude that actual malice existed. For the reasons discussed
below, we affirm the judgment of the district court.

                                      Jurisdiction

       Jurisdiction was proper in the district court based upon 28 U.S.C. § 1367(a).3
Jurisdiction on appeal is proper based upon 28 U.S.C. § 1291. The notice of appeal
was timely filed pursuant to Fed. R. App. P. 4(a).

                                      Background

       The following facts are stated in the light most favorable to the jury's verdict.
The District hired Smith as the director of technology systems in July 1995. In that
position, he reported to Pat Moran, the associate superintendent of management
services, and supervised three employees, including Donna Pittman, an executive
secretary, and Jacquelyn Seymour, an outside project manager specialist hired by
Smith. According to Smith, the technology department was in disarray when he
arrived and he exposed serious problems and initiated many controversial changes,
which were met with heated resistance, especially by the District's superintendent, Gary
Wegenke. At Moran's request, his executive secretary, Linda Dinsdale, along with
Smith's secretary, Pittman, began keeping secret files on Smith, which documented the
whereabouts and work activities of Smith and Seymour, their phone messages,


      3
       District court jurisdiction was originally predicated on 28 U.S.C. § § 1331 and
1332. After the district court dismissed the federal claims pursuant to a motion for
summary judgment, it retained jurisdiction over the remaining state claim pursuant to
28 U.S.C. § 1367(a), which provides for supplemental jurisdiction.

                                           -2-
calendars, correspondence, overheard phone conversations, and other meetings. Smith
discovered the existence of these files on June 30, 1996.

        On July 2, 1996, Smith met with Wegenke and asked about the files. Smith
suspected that the purpose of the files was to make him the scapegoat for the
technology department's failures. He also thought that they indicated racial animus
toward Seymour, an African-American. When Wegenke challenged Smith to produce
the files, Smith went to retrieve them from the file cabinet where the files were kept
between Smith's office and Dinsdale's desk. Dinsdale tried to stop him and the two had
physical contact. Smith contends that he accidentally bumped into Dinsdale as she
tried to prevent him from reaching the files. Dinsdale received a bruise on her arm
about 2-3 inches in diameter. Smith obtained the files and returned to his office to
show them to Wegenke, without mentioning the incident.

        Dinsdale later complained to Wegenke that Smith hit her when he retrieved the
files, and the District began an internal investigation, overseen by its attorney, Peter
Pashler. Smith and two school board members, Suzette Jensen and John Phoenix,
characterized this investigation as a "witchhunt," motivated by Wegenke's desire to
terminate and defame Smith. On July 3, 1996, Smith was placed on administrative
leave pending the outcome of the investigation. On July 4, 1996, Dinsdale filed a
complaint with the Des Moines Police Department alleging that Smith assaulted her.
The District was not involved in her criminal complaint in any official capacity, but did
refer Dinsdale to an attorney and pay her attorney's fees. Smith believed that the
criminal charges were used as leverage against him to persuade him to resign.

        Two District employees witnessed the incident and related the following
accounts: (1) Mike Tidman told an investigating police officer that he saw Smith raise
his left arm and push Dinsdale away, and (2) Lynne Harrison told the police officer that
Smith "used his body like to deflect or shove away" as he was standing up. Smith


                                          -3-
testified that he accidentally bumped into Dinsdale as he was retrieving the files and
righting himself as he stood up.

      Smith was charged with assault on July 11, 1996, was arrested on July 12, 1996,
and was released the same day after posting bond. On August 22, 1996, Dinsdale
signed a confidential settlement agreement and mutual release, releasing Smith, from
any further liability in connection with the July 2 incident. On August 23, 1996, the
prosecutor filed a notice of intent not to prosecute on the basis that the victim did not
want to pursue prosecution.

        On August 26, 1996, the District gave Smith a general release and separation
agreement and told him he must either sign both documents or face termination
proceedings. Smith signed the release, in which he agreed to resign voluntarily and not
sue the District. Smith's resignation was approved at a District board meeting on
August 27. After the vote, in open session, Wegenke read a statement he had prepared
with the assistance of the District's counsel, which included the following statements:
(1) "the incident that took place in early July in the technology offices is regrettable.
As I said to an assembly of central office staff following the incident, I will not tolerate
an unsafe workplace for our employees," and (2) "the action of the District's lawyers
and Mr. Smith's lawyers have been focused on reaching a compromise settlement, a
settlement that has been motivated on the District's side of the issue of employee safety
in the workplace." At trial, Wegenke testified that these statements were made in good
faith, for the purpose of addressing workplace safety, and that he did not intend to
slander Smith. After hearing these statements, Smith attempted to revoke the
settlement agreement, pursuant to a section of the agreement enabling him to revoke
within 7 days. In a meeting between counsel from both sides, Pashler, the District's
counsel, produced a photograph allegedly taken of Dinsdale's bruised arm, which
prompted Smith to reconsider revoking the settlement agreement because he feared that
the District might bring future criminal charges against him.


                                            -4-
       Following Smith's resignation, despite much resistance from Wegenke, school
board member Suzette Jensen initiated an audit of the technology department, which
confirmed Smith's assessment of the District's technology problems. The audit was
released in November 1996 and blamed Smith for the technology department's
problems. Smith, Jensen, and another technology department employee believed the
audit was designed to make Smith the District's scapegoat for its technology problems.

       In July 1998, Smith filed this action pro se in the United States District Court for
the Southern District of Iowa. In September 1999, he filed an amended complaint with
the help of counsel. Following various pretrial and trial motions, the ten originally-filed
counts against the District, including some arising under federal law, were reduced to
one state law count of defamation. The district court retained supplemental jurisdiction
over the remaining Iowa defamation claim pursuant to 28 U.S.C. § 1367(a). The matter
proceeded to a four-day jury trial. The jury found that the District committed slander
per se against Smith and awarded Smith $250,000 in compensatory damages. The
District moved for judgment as a matter of law or, in the alternative, for a new trial.
The district court denied the motion on June 1, 2000. This appeal followed.

                                       Discussion

Standard of Review

      The District first argues that the district court erred in denying its motion for
judgment as a matter of law because the allegedly defamatory statements were true or
substantially true. We review the denial of a motion for judgment as a matter of law
de novo, applying the same standard as the district court. Denesha v. Farmers Ins.
Exch., 161 F.3d 491, 497 (8th Cir. 1998) (Denesha). Like the district court, we
consider whether sufficient evidence exists to support the jury's verdict. See Lundell
Mfg. Co. v. ABC, 98 F.3d 351, 355 (8th Cir. 1996) (Lundell), cert. denied, 522 U.S.
810 (1997). We will defer to a jury verdict unless, "after viewing the evidence in the

                                           -5-
light most favorable to the verdict, we conclude that no reasonable juror could have
returned the verdict for the non-moving party." Denesha, 161 F.3d at 497 (quoting
Ryther v. KARE 11, 108 F.3d 832, 836 (8th Cir. 1997) (en banc)). In considering this
issue, we must: (1) examine the evidence in the light most favorable to Smith as the
non-moving party, (2) resolve all conflicts in favor of Smith, (3) assume that all facts
which Smith's evidence tended to prove are true, (4) give Smith the benefit of all
inferences that may reasonably be drawn in his favor, and (5) affirm the denial of the
District's motion unless it is unreasonable to sustain Smith's position. Id. We review
the denial of a new trial for abuse of discretion, and will reverse the district court's
ruling only if "'the jury's verdict were against the great weight of the evidence so as to
constitute a miscarriage of justice.'" Id. (quoting Pulla v. Amoco Oil Co., 72 F.3d 648,
656 (8th Cir. 1995)).

Defense of Truth or Substantial Truth

        Iowa substantive law applies to the issue of whether substantial truth serves as
a defense in a defamation action. See In re IBP Confidential Bus. Documents
Litigation, 797 F.2d 632, 639 (8th Cir. 1986). In Iowa, substantial truth does serve as
a defense in a defamation action. See Behr v. Meredith Corp., 414 N.W.2d 339, 342
(Iowa 1987) (Behr). As a result, it is "[not] necessary for a libel defendant to establish
the literal truth of the publication in every detail as long as the 'sting' or 'gist' of the
defamatory charge is substantially true." Behr, 414 N.W.2d at 342 (citing Hovey v.
Iowa State Daily Publ'n Bd., 372 N.W.2d 253, 256 (Iowa 1985)). The "sting" or "gist"
of an allegedly defamatory remark is defined as "'the heart of the matter in question –
the hurtfulness of the utterance.'" Id. (quoting Vachet v. Central Newspapers, Inc., 816
F.2d 313, 316 (7th Cir. 1987)).

      The District argues that the district court erred in failing to hold as a matter of
law that the allegedly defamatory remarks were substantially true. See Brief for
Appellant at 19 (citing Behr, 414 N.W.2d at 342). The District reasons that the

                                            -6-
allegedly defamatory remarks were substantially true because they captured the "sting
or gist of the defamatory charge," which the District characterizes as Smith's unsafe
workplace behavior in pushing Dinsdale out of his way to get the files. Id.

        The District is correct that a court may determine as a matter of law whether a
statement has the gist or sting of the defamatory charge when the underlying facts are
undisputed. See Behr, 414 N.W.2d at 342. Under those circumstances, the court bases
its findings on "whether the plaintiff would have been exposed to any more opprobrium
had the publication been free of error." Id. The District argues that the district court
erred in failing to find that the allegedly defamatory remarks were substantially true
because they would have created the same impact even if the words "unsafe
workplace" were substituted with the actual words used by the witnesses to describe
the incident. See Brief for Appellant at 24 (citing Lundell, 98 F.3d at 360 (finding
substantial truth "when the sting of the implication is still present when the full
chronology is laid out")).

       However, the District fails to recognize that when the underlying facts regarding
the allegedly defamatory remarks are disputed, the question of substantial truth must
be submitted to a jury. Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 522-25
(1991) (analyzing whether allegedly defamatory statements differed materially enough
in meaning from the underlying facts "to create an issue of fact for a jury as to falsity");
Lundell, 98 F.3d at 358 (holding that when "it is evident that the underlying facts as to
the gist of the statement are the subject of a reasonable dispute . . . it is for the jury to
decide the meaning conveyed"); Wilson v. IBP, Inc., 558 N.W.2d 132, 140-41 (Iowa
1996) (holding that the district court properly dismissed a motion for judgment as a
matter of law and submitted the issues to the jury when an allegedly defamatory
statement could reasonably be understood as imputing dishonesty to the plaintiff and
an attack on his integrity and moral character).




                                            -7-
       In the present case, the underlying facts were disputed and there was a triable
issue of fact regarding whether Smith's contact with Dinsdale was in fact accidental.
Furthermore, there was substantial evidence in the record from which a reasonable jury
could have concluded that the District's statements characterizing Smith as a dangerous
employee were false and defamatory. As a result, we hold that the district court did not
err in denying the District's motion for judgment as a matter of law or for a new trial
on the issue of whether the allegedly defamatory statements were substantially true.

Actual Malice

       The District contends that the district court erred in failing to recognize that the
allegedly defamatory remarks were made in good faith, not with actual malice, and
therefore entitled the District to the alternative defense of qualified privilege. We
disagree.

       Under the law of defamation in Iowa, a defendant may assert the affirmative
defense of qualified privilege if the allegedly defamatory remarks were "made in good
faith on any subject matter in which the person communicating has an interest, or in
reference to which that person has a right or duty, if made to a person having a
corresponding interest or duty in a manner and under circumstances fairly warranted
by the occasion." Knudsen v. Chicago & N.W. Transp. Co., 464 N.W.2d 439, 442
(Iowa 1990); see also Haldeman v. Total Petroleum, Inc., 376 N.W.2d 98, 104 (Iowa
1985) (Haldeman) "[T]he availability of the privilege is for the court rather than the
jury to decide." Vinson v. Linn-Mar Cmty. Sch. Dist., 360 N.W.2d 108, 116 (Iowa
1984) (Vinson). The parties agree that the District is entitled to assert the qualified
privilege defense because the allegedly defamatory remarks addressed matters related
to the termination of an administrator. See Vojak v. Jensen, 161 N.W.2d 100, 105
(Iowa 1968).




                                           -8-
       Once the district court allows a defendant to assert the qualified privilege
defense to a defamation claim, as in this case, the burden shifts to the plaintiff to prove
actual malice, which is a question of fact for the jury. See Haldeman, 376 N.W.2d at
104. The District argues that there was insufficient evidence for a jury to find actual
malice because actual malice requires proof of ill will or wrongful motive, which did
not exist in the present case. See Vinson, 360 N.W.2d at 117 ("[a]ctual malice requires
proof that the statement was made with malice in fact, ill will or wrongful motive").
Specifically, the District maintains that there was not sufficient independent evidence
to support a finding that there was a rift between Smith and Wegenke, or that
Wegenke's approval of the secret files indicated any actual malice. See Brief for
Appellant at 32 (citing Sawheny v. Pioneer Hi-Bred, 93 F.3d 1401, 1404 (8th Cir.
1996) (refusing to find ill will or wrongful motive when the alleged defamation was part
of a larger explanation)).

        The District is correct that, under Iowa law, actual malice "requires proof that
the statement was made with ill will, hatred, the desire to do another harm, or wrongful
motive." See Marks v. Estate of Hartgerink, 528 N.W.2d 539, 546 (Iowa 1995)
(Marks). See also Iowa Civil Jury Instruction 2100.5 (defining actual malice as
"statements made with ill will or wrongful motive"); King v. Sioux City Radiological
Group, 985 F. Supp. 869, 879-80 (N.D. Iowa 1997) (defining actual malice as
dependent upon the motive behind the allegedly defamatory communication). As a
result, Smith needed to prove only that Wegenke harbored ill will against him, not that
Wegenke knew that his statements were false or that he showed a reckless disregard
for the truth. See Marks, 528 N.W.2d at 546 (clarifying that actual malice, as distinct
from implied malice, does not require a showing of knowing falsity or reckless
disregard for the truth).

      Because a reasonable jury could find sufficient evidence of Wegenke's ill will
toward Smith, including evidence of an attempt to pin the blame for the problems and
mismanagement of the technology department on Smith, the existence of the secret

                                           -9-
files, and the documented rift between Smith and Wegenke, we hold, in agreement with
the district court, that sufficient evidence existed to support the jury's verdict. We
further hold, in agreement with the district court that, because the jury resolved the
factual issue by finding that Wegenke's statements were false and malicious, we must
defer to that finding. Denesha, 161 F.3d at 497. We therefore hold that the district
court did not err in denying the District's motion for judgment as a matter of law or
abuse its discretion in refusing to grant the District's motion for a new trial on the issue
of whether there was sufficient evidence of actual malice, notwithstanding the District's
assertion of the qualified privilege defense.

       Accordingly, the judgment of the district court is affirmed.

       A true copy.

              Attest:

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




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