Preview:

IN THE SUPREME COURT OF IOWA
No. 57 / 04-0434 Filed September 15, 2006 ARTHUR YATES, BEVERLY YATES, and YATES KENNEL, INC., Appellees, vs. IOWA WEST RACING ASSOCIATION d/b/a BLUFFS RUN CASINO, and HARVEY'S BLUFFS RUN MANAGEMENT COMPANY, INC., Appellants.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Pottawattamie County, Jeffrey L. Larson and Timothy O'Grady, Judges.

Defendants appeal from adverse jury verdict on claims of defamation and negligence; Plaintiffs cross appeal from district court's refusal to submit punitive damages on their negligence claim. COURT OF APPEALS

DECISION AFFIRMED; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED WITH DIRECTIONS.

Donald J. Pavelka, Jr., and Thomas M. Locher of Locher Pavelka Dostal Braddy & Hammes, LLC, Omaha, Nebraska, for appellants.

Jerry Crawford and Jim Quilty of Crawford Law Firm, Des Moines, for appellees.

2 LAVORATO, Chief Justice. This action arises out of the defendants' alleged slanderous statements about a greyhound kennel and the defendants' alleged negligence in maintaining its track that allegedly resulted in injuries to the kennel's racing dogs. The defendants appealed from an adverse jury verdict on both claims. The kennel cross appealed, contending that the district court erred in not submitting punitive damages on its negligence claim. We transferred the case to the court of appeals, which reversed on the appeal, concluding that the district court erred in overruling the defendants' motion for directed verdict on both the slander and negligence claims. Because of its decision on the negligence claim, the court of appeals did not address the cross-appeal. The kennel filed an application for further review, which we granted. We affirm the court of appeals decision, reverse the district court judgment, and remand the case with directions. I. Background Facts. Arthur and Beverly Yates are the owners of Yates Kennel, Inc., an Iowa corporation. Yates Kennel is a greyhound racing dog kennel that operated at Bluffs Run Casino (BRC) in Council Bluffs, Iowa. Iowa West Racing Association (IWRA) is a non-profit corporation and an Iowa statutory dog track licensee. IWRA is the owner of the license to operate Bluffs Run Casino. Harveys BR Management Company, Inc. (Harveys), a Nevada

corporation, manages Bluffs Run pursuant to a management agreement with IWRA. In 1998, 1999, and 2000, Yates Kennel obtained booking contracts with Harveys to have its greyhound dogs participate in greyhound racing meets at Bluffs Run. In 1999 and 2000, there was an increase in the number of injuries and deaths of greyhounds while racing at Bluffs Run. A

3 number of those casualties were to Yates Kennel dogs. Kennel owners, including the Yates, thought the injuries and deaths resulted from the track being too hard in some spots and too soft in other spots. In 2000 the Yates heard rumors that its kennel would not receive a booking contract for 2001. On November 16, 2000, the Iowa Racing and Gaming Commission (Commission), a state agency that regulates racing in Iowa, held a meeting. Jerry Crawford, an attorney for the Iowa Greyhound Association (IGA), an organization of kennel owners and operators, spoke at that meeting. At the time, Beverly Yates was a director of IGA. In relevant part regarding injuries to the racing greyhounds, the minutes of that meeting reflect the following: Chair Hansen called on the Iowa Greyhound Association (IGA). Jerry Crawford, legal counsel for the IGA, advised they requested the opportunity to appear before the Commission to discuss the contractual ramifications of the track condition at Bluffs Run Casino (BRC), and more specifically, the contracts between BRC and the kennel owners/operators. He stated that some individuals would consider this to be a private matter between the track as a business and third parties, but feels that thought process ignores the Commission's responsibility as BRC is a regulated business entity. He pointed out that the Commission determines the amount of money BRC is required to pay in purses to the third party kennel operators. Additionally, the Commission is responsible for monitoring the safety of the track conditions at the facility. Mr. Crawford stated that the track condition has been better on some occasions than others, but that it is not necessary to go back any further than the Commission meeting in Clinton when Verne Welch, BRC's general manager, stated that two track records had been set in a one-week period. He indicated the Commission should be concerned as that means the track surface is like asphalt, making it very dangerous for the greyhounds. If the track surface is endangering the safety of the greyhounds, it is creating enormous financial and practical problems for the kennel owners and operators. Mr. Crawford stated that greyhounds are very expensive, and it is difficult for the owners/operators to maintain an active list when they are injuring dogs at a record rate. They are also faced with the economic hardship of replacing those dogs.

4 As the minutes reflect, Crawford then got into the question of kennel contracts for the year 2001: At this point, all IGA knows is that some BRC kennel operators have not received a contract for the coming year. Mr. Crawford informed the Commission that the Arthur and Beverly Yates Kennel is one of the operators that has not received a contract offer for 2001. He noted that the Yates kennel has experienced 20 broken legs so far in 2000, and has had between 10-15 additional greyhounds removed from racing due to other raceending injuries. In terms of dollars won, they are second from the bottom. This year money won in stakes' races were not included in kennel standings, which is a variation from previous years. Mr. Crawford stated that the Yates Kennel did very well in stake races, noting that they had two dogs in the final Iowa Breeders Championship Race. He noted that one of the owners is an officer of the IGA, and BRC has indicated they are critical of them on the topic of the track condition. Crawford then requested the Commission to establish a timetable in order to review this matter to determine fairness due to the various issues faced by the kennel operators at BRC. He stressed to the Commissioners that it is the members of IGA, the kennel owners/operators, breeders and trainers, who have suffered the entire financial consequence of what has happened at BRC this year. He questioned whether the Commission should allow these small Iowa-based businesses to suffer the additional financial consequence of being put out of business at BRC. Crawford asked the Commission to stop the execution of contracts so that "a fair and equitable dismissal clause" that ensures competent performance could be worked out. He also asked that the Commission "not allow BRC to do whatever it chooses to do with regard to kennel contracts." The Commission then allowed individuals with an opposing view an opportunity to speak. Lyle Ditmars, legal counsel for BRC, responded to the various issues Crawford raised. On one of those issues, timing of the kennel contracts, the minutes reflect that Ditmars stated the following: Mr. Ditmars stated the timing is the same as last year. BRC established a committee that reviewed several criteria in determining who would be offered contracts: ranking of the kennel by number of wins; win percentage; compliance with

5 contract requirements regarding the active list; compliance with contract requirements regarding the number of active greyhounds classified as A and B; residency of the owner; and contracts with the state of Iowa. He noted there have been instances where the kennel operators resided in Iowa, but did not have any Iowa-bred greyhounds in the kennel. Other factors are the willingness of the operator to use Iowa-bred greyhounds; quality of greyhounds maintained throughout the year; participation by the kennel operator in activities and programs designed to promote, enhance and improve greyhound racing at BRC; whether the kennel operator participated in activities that are potentially harmful to the operation of racing at BRC or other kennel operators; and the kennel operator's compliance with other contract requirements. Ditmars then made the following comments about the Yates Kennel: Mr. Ditmars stated that BRC does not discuss who will or will not get a kennel contract with other kennel operators. Mr. Ditmars confirmed that the Yates Kennel was not offered a contract for 2001, and will not be offered one. In 1999 the kennel was in the bottom two or three kennels in terms of performance. They were given a six-month contract. At the end of that contract, even though they remained in the bottom five, they were given an additional six-month contract to give them an opportunity to correct the situation. At this time, the Yates Kennel is second from last in terms of wins and third from the bottom in terms of win percentage for the year. Mr. Ditmars stated that the decision was not arbitrarily made. He noted that Ms. Yates was on the board of directors of the IGA when they were offered their first kennel contract; Jason Hines was the president of IGA when he was offered a contract; and Bob Rider, who has had two six-month contracts and addressed the Commission regarding issues at BRC last year, was offered a new contract for 2001. Additionally, in response to a commissioner's question, Ditmars reportedly stated that he denied that any of the criteria established to determine which kennels would be offered contracts for next year were based on retribution for voicing criticism regarding BRC. According to the minutes, Crawford made a number of comments in rebuttal to Mr. Ditmars comments. One such comment included the following: "Mr. Crawford

questioned the reasons given for terminating the Yates Kennel when kennels ranked lower than them received contracts for 2001, and over half

6 of the kennels consistently have less than the required number of greyhounds on the active list." In response to this last comment, the minutes show that Ditmars stated the following: "Mr. Ditmars reiterated that the Yates Kennel is second from last in the kennel standings. The kennel in last place did not receive a six-month contract in the previous year, as did the Yates Kennel due to poor performance in 1999." According to the minutes, the Commission took no action on Crawford's request. One commissioner "noted that the agenda stated it was to be a discussion of the contractual and financial ramifications of track conditions at BRC." Another commissioner stated that "BRC is a private commercial company contracting with other private commercial companies" and she "could not foresee the Commission getting involved unless something unsavory was taking place." Newspaper reporters present during the meeting wrote newspaper accounts containing some of Ditmars' statements about Yates Kennel. II. Proceedings. Six months later, the Yates and Yates Kennel (hereinafter collectively referred to as plaintiffs) sued IWRA and BRC (hereinafter collectively referred to as defendants), alleging a number of theories for recovery, only two of which are relevant to this appeal: slander per se and negligence. As to both theories, the plaintiffs sought compensatory and punitive damages. The plaintiffs alleged that Ditmars' statements before the Commission were slanderous per se. The plaintiffs also alleged that the defendants'

negligence in maintaining the dog track caused injuries to its dogs for which it suffered damages. The parties tried the case to a jury, and the district court submitted for the jury's consideration the slander and negligence claims as well as

7 punitive damages on the slander claim. The court refused to submit punitive damages on the negligence claim. On the slander claim, the jury awarded no compensatory damages but did award punitive damages. On the negligence claim, the jury found the plaintiffs thirty-three percent at fault and the defendants sixty-seven percent at fault. The jury awarded damages for loss of income, lost value of injured greyhounds, and veterinary expenses. The defendants appealed both the slander and negligence verdicts. The plaintiffs cross-appealed, contending the district court erred in not submitting punitive damages on their negligence claim. We transferred the case to the court of appeals. The court of appeals reversed on the appeal. Because the court of appeals reversed on the appeal, it did not address the cross-appeal. We granted the plaintiffs' application for further review. III. Issues. Although a number of issues were raised on appeal, we determine that only the following issues require discussion: whether the district court erred in denying the defendants' motion for directed verdict in which the defendants asserted that (1) the alleged slanderous statements in question were true as a matter of law and (2) there was insufficient evidence that the track conditions proximately caused injuries to the plaintiffs' dogs. IV. Scope of Review. We review the district court's rulings on motions for directed verdict for correction of errors at law. Estate of Pearson ex rel. Latta v. Interstate Power & Light Co., 700 N.W.2d 333, 340 (Iowa 2005). In reviewing such rulings, we view the evidence in the light most favorable to the nonmoving party to determine whether the evidence generated a fact question. Dettmann v. Kruckenberg, 613 N.W.2d 238, 250-51 (Iowa 2000). To

8 overcome a motion for directed verdict, substantial evidence must exist to support each element of the claim or defense. Id. at 251. Substantial evidence exists if reasonable minds could accept the evidence to reach the same findings. Id. V. The Defamation Claim: Truth as a Defense. The first issue we address is whether the district court erred in overruling the defendants' motion for directed verdict on the ground that the alleged slanderous statements were true as a matter of law. 1. Applicable law. The law of defamation includes the twin torts of libel and slander. Schlegel v. The Ottumwa Courier, 585 N.W.2d 217, 221 (Iowa 1998). "Libel is generally a written publication of defamatory matter, and slander is generally an oral publication of such matter." Id. (citation omitted). As we noted in Schlegel, "[t]he law of defamation embodies the public policy that individuals should be free to enjoy their reputation unimpaired by false and defamatory attacks. An action for defamation or slander is based upon a violation of this right. The gravamen or gist of an action for defamation is damage to the plaintiff's reputation. It is reputation which is defamed, reputation which is injured, and reputation which is protected by the law of defamation. Defamation is an impairment of a relational interest; it denigrates the opinion which others in the community have of the plaintiff and invades the plaintiff's interest in the [plaintiff's] reputation and good name." Id. (quoting 50 Am. Jur. 2d Libel and Slander

Download ARTHUR YATES, BEVERLY YATES, and YATES KENNEL, INC. vs. IOWA.pdf

Iowa Law