William DeRosa, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1171

William DeRosa,
Appellant,

vs.

Craig M. McKenzie,
Respondent.

Filed March 11, 2019
Affirmed
Bjorkman, Judge

Hennepin County District Court
File No. 27-CV-17-10988

John B. Williams (pro hac vice), Williams Lopatto PLLC, Washington, D.C.; and

Courtney R. Sebo, Excelsior Law Firm, LLC, Excelsior, Minnesota (for appellant)

K. Jon Breyer, Kutak Rock LLP, Minneapolis, Minnesota (for respondent)

Considered and decided by Connolly, Presiding Judge; Bjorkman, Judge; and
Florey, Judge.
U N P U B L I S H E D O P I N I O N
BJORKMAN, Judge
Appellant challenges the dismissal of his defamation claim, arguing that the district
court erred by determining that the complaint failed to state a claim upon which relief could

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be granted because it did not allege that respondent chief executive officer (CEO) made
the statements contained in a corporate press release. We affirm.
FACTS
In 2014, Lone Star Value Management acquired a substantial equity stake in Dakota
Plains Holdings, Inc., an energy transportation company. The two companies executed a
non-disclosure agreement prohibiting disclosure of confidential information to third parties
but permitting disclosure between the two companies. The companies also agreed that
Lone Star could place a nominee on the Dakota Plains board of directors. Lone Star
nominated appellant William DeRosa, who joined the board in July 2014.
The appointment was “poorly received” by respondent Craig McKenzie, Dakota
Plains’ CEO and board chairman. DeRosa requested that the board adhere to proper
corporate governance protocols , which McKenzie characterized as “a distraction .” And
McKenzie accused DeRosa of improperly leaking confidential information to Lone Star’s
CEO. The board subsequently adopted new bylaws prohibiting the sharing of confidential
information with Lone Star. McKenzie then accused DeRosa of violating the new bylaws,
and Lone Star asked DeRosa to resign from the Dakota Plains board of directors . He did
so on February 13, 2015.
Ten days later, Dakota Plains sued DeRosa in Nevada, alleging that he breached his
fiduciary duties to Dakota Plains by disclosing confid ential information. DeRosa
counterclaimed, and the parties litigated for more than a year . Dakota Plains eventually
paid DeRosa $10,000 to settle the action.

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In early 2016, while the Nevada action was pending, a proxy battle emerged
between Lone Star a nd Dakota Plains. Lone Star nominated five directors to the board.
Dakota Plains responded by issuing a press release in Business Wire, a wire service
routinely read by individuals in the financial industry. The press release criticized Lone
Star’s nominations and stated:
Moreover, after the Company appointed William DeRosa of
Lone Star Value to the Board in 2014, Mr. DeRosa
subsequently 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.

Dakota Plains denied DeRosa’s request for a retraction, and the press release remains
available on the internet.
In July 2017, DeRosa initiated this action against McKenzie, 1 claiming defamation
based on “his actions in directing and publishing a press release falsely accusing
Mr. DeRosa of ‘violating his fiduciary duties’ and ‘committing unlawful acts’” a nd
asserting a related claim of intentional infliction of emotional distress. McKenzie moved
to dismiss the complaint under Minn. R. Civ. P. 12.02(e) for failure to state a claim. The
district court granted the motion with prejudice, reasoning that (1) Minnesota law does not
support a defamation claim against McKenzie personally “based solely upon allegations
that McKenzie, in his position as CEO and Chairman, directed and ultimately authorized
issuance of the press release” and (2) DeRosa’s dependent emotional-distress claim also

1 In late 2016, Dakota Plains filed a chapter 11 bankruptcy petition.

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fails. But the district court permitted DeRosa to file an amended complaint within 20 days.
DeRosa did so, adding allegations that McKenzie “authorized and approved the defamatory
publication” and therefore “had control over th e publication and is liable, directly and
vicariously, for its content under Minnesota law.” McKenzie moved to dismiss the
amended complaint. The district court granted the motion. DeRosa appeals.
D E C I S I O N
A district court may dismiss a complaint when the plaintiff fails to state a claim
upon which relief can be granted. Minn. R. Civ. P. 12.02(e). On appeal from such a
dismissal, we review de novo whether the complaint sets forth a legally sufficient claim
for relief. Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014). We take the facts
alleged in the complaint as true and draw inferences in favor of the nonmoving party. See
Bodah v. Lakeville Motor Express, Inc. , 663 N.W.2d 550, 553 (Minn. 2003); see also N.
States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 490 (Minn. 2004) (stating that
a court may also consider documents referenced in the complaint on a rule 12.02 motion
to dismiss for failure to state a claim).
To establish defamation, a plaintiff must show that (1) the defendant made a false
statement, (2) the defendant communicated the statement to a third party, and (3) the
statement harmed the plaintiff’s reputation in the community. Weinberger v. Maplewood
Review, 668 N.W.2d 667, 673 (Minn. 2003). DeRosa argues his amended complaint sets
forth the first element because it alleges that McKenzie “authorized and approved ” the
press release. We disagree.

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DeRosa cites no authority for the proposition that a person is liable for defamation
when he authorizes and approves statements made by another. As a factual matter, DeRosa
does not allege that McKenzie wrote, dictated, or otherwise generated any of the content
of the press release. Nor does he claim that McKenzie authorized and approved the press
release as his own statement. Rather, McKenzie authorized and approved the press release
on behalf of Dakota Plains—the entity with ultimate responsibility for the press release and
to which the press release was expressly attributed. See Janus Capital Grp. v. Fir st
Derivative Traders, 564 U.S. 135, 142-43, 131 S. Ct. 2296, 2302 (2011) (reasoning, in the
context of an SEC rule, that “the maker of a statement is the person or entity with ultimate
authority over the statement,” not one “who prepares or publishes a statement on behalf of
another,” and that attribution within a statement “is strong evidence that a statement was
made by—and only by—the party to whom it is attributed”).
DeRosa nonetheless urges that one may be liable for another’s defamatory speech
if he exercised “control” over the speech, citing Friedell v. Blakely Printing Co., 203 N.W.
974 (Minn. 1925). This argument is misplaced . In Friedell, the supreme court relied on
general agency principles in holding that a newspaper may be liable for its em ployee’s
defamatory speech because of the control it exerts over its employees. 203 N.W. at 977.
Friedell may support holding Dakota Plains responsible for the defamatory statement of
the unidentified employee who wrote the press release , but it provides no basis for
extending liability to a corporate officer such as McKenzie. Indeed, l iability can attach to
the employee or officer for a corporation’s defamatory speech only if he is its author. See
Ellingson v. World Amusement Serv. Ass’n, 222 N.W. 335, 339 (Minn. 1928) (stating that

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an officer of a corporation who takes part in the commission of a tort by the corporation is
personally liable therefor).
In short, taking DeRosa’s allegations as true, McKenzie merely reviewed statements
that another wrote and authorized and approved their release on behalf of Dakota Plains .
Because these facts do not state a claim for relief against McKenzie, the district court did
not err by dismissing the amended complaint.2
Affirmed.

2 Because DeRosa fails to state an actionable defamation claim, his dependent claim of
intentional infliction of emotional distress likewise fails.