author: WHITE, Associate Justice (Ret.).

text:
    Julian TONEY, Plaintiff-Appellant, v. WCCO TELEVISION, MIDWEST CABLE AND SATELLITE, INC., also known as WCCO TV, Channel 4, also known as IOWCCO TV, Channel 411, Defendant-Appellee.
    No. 95-1190.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 19, 1995.
    Decided June 7, 1996.

      Curt Krull, Des Moines, Iowa, argued (Jacques D. Schira, on the brief), for appellant.
    Paul R. Hannah, St. Paul, Minnesota, argued (Laurie A. Zenner, St. Paul, Minnesota, and Douglas P. Jacobs, New York City, on the brief), for appellee.
    Before RICHARD S. ARNOLD, Chief Judge, WHITE, Associate Justice (Ret.), and LOKEN, Circuit Judge.

       The Honorable Byron R. White, Associate Justice of the United States Supreme Court, (Ret.), sitting by designation, pursuant to 28 U.S.C. § 294(a).

   WHITE, Associate Justice (Ret.).

I. INTRODUCTION

Plaintiff-Appellant Julian Toney (“Toney”) brought this action against Defendant-Appellee WCCO Television, Midwest Cable and Satellite, Inc., a/k/a WCCO TV, Channel 4 (“WCCO”), alleging that a report on the sale of dogs to research institutions defamed him and defamed him by implication. The district court granted summary judgment to WCCO. For the reasons set forth below, we reverse in part and affirm in part the district court’s judgment that WCCO did not defame Toney, reverse its dismissal of Toney’s defamation by implication claim, and remand this case for further proceedings.

II. BACKGROUND

Toney is a dog dealer who resides in Iowa and does business in Iowa, Missouri and Minnesota. Toney, who had registered with and was licensed by the United States Department of Agriculture (“USDA”), sold dogs to the University of Minnesota. On or about May 20, 1992, WCCO, a television station headquartered in Minneapolis, Minnesota, broadcast a report about how certain dog dealers sold stolen dogs to research institutions for use in medical research. The broadcast included interviews with a representative from the University of Minnesota laboratories, an official from the USDA, owners of dogs who believed that their pets may have been stolen and sold to research laboratories as well as Toney and another USDA licensed dog dealer.

In pertinent part, WCCO’s report stated that:

So these animals that are “retired from service,” or unclaimed at the pound, or stolen from unsuspecting owners are sold to middlemen. The USDA licenses these middlemen and calls them Class B dog dealers. According to the Animal Welfare Act only these Class B[dog] dealers can sell animals to research institutions. But we found plenty of holes in this system that may also be protecting animal thieves.
* * * * * *
South about 40 miles on the Iowa/Missouri border, we found the place where Class B dealer Julian Toney buys the dogs he sells to the University.
* ^ * * * *
According to USDA records Mr. Toney supplies about a thousand dogs a year to the University of Minnesota. He told us the university is only about a fifth of his business. He said he seldom gets animals from dog pounds. But when we checked his 1990 records, we found he was telling the USDA just the opposite.
Last week, the USDA confirmed that Julian Toney himself is under investigation for falsification of records.
No one is accusing major research institutions of seeking out stolen pets for their experiments. But the system relies on human honesty and adequate enforcement, and we found shortages of both.

App. at 46-48. Shortly after the broadcast, the USDA charged Toney with falsifying his records.

After WCCO refused to retract its statements about Toney, he filed a two-count complaint alleging that WCCO defamed him directly and also by implication. Specifically, Toney maintained that the report implied that he sold stolen animals, was dishonest and a thief, and lied about the source of his animals. Alleging that this report damaged him personally as well as professionally, Toney requested compensatory as well as punitive damages in an amount over $50,000.

WCCO moved to dismiss Toney’s amended complaint, or in the alternative, for judgment as a matter of law. After holding oral argument, the district court first rejected Toney’s defamation claim, ruling that the statements in the report about Toney were either true or non-defamatory. The court then held that, because Minnesota did not provide a claim for relief based on defamation by implication, WCCO was also entitled to summary judgment on Toney’s implied defamation claims. Toney filed this timely appeal.

III. DISCUSSION

A. APPLICABLE LAW AND STANDARD OF REVIEW

Because this ease arises under this court’s diversity jurisdiction, the substantive issues are governed by Minnesota law. B.B. v. Continental Ins. Co., 8 F.3d 1288, 1291 (8th Cir.1993). Thus, our task is to determine and apply Minnesota law. Farr v. Farm Bureau Ins. Co., 61 F.3d 677, 679 (8th Cir.1995). Of course, Minnesota courts must apply federal constitutional standards that are applicable to cases like this. In this regard, it is conceded that Toney is not a public figure; rather, he is a private plaintiff in this defamation case.

We review the district court’s interpretation of Minnesota law de novo. Id. We also review de novo the district court’s grant of WCCO’s motion for summary judgment. Continental Ins. Co., 8 F.3d at 1291. Summary judgment for WCCO is proper “if there is no genuine issue as to any material fact.” Fed.R.Civ.P. 56(c).

B. DEFAMATION AND DEFAMATION BY IMPLICATION

Count 1 of Toney’s complaint alleges defamation; Court 2 alleges defamation by implication. To prevail on either of these claims, Toney must prove that WCCO’s publication about him defamed him by establishing that WCCO (1) published a statement of fact; (2) of and concerning him; (3) which was false; and (4) damaged his reputation and lowered his estimation in the community. See Lewis v. Equitable Life Assurance Soc’y, 389 N.W.2d 876, 886 (Minn.1986); Foley v. WCCO Television, Inc., 449 N.W.2d 497, 500 (Minn.Ct.App.1989), cert. denied, 497 U.S. 1038, 110 S.Ct. 3302, 111 L.Ed.2d 811 (1990).

Under Minnesota defamation law, a statement falls into one of three categories: (1) those that are clearly defamatory on their face; (2) those that could not possibly have a defamatory meaning; and (3) those that are reasonably susceptible to a defamatory meaning as well as an innocent one. Church of Scientology v. Minnesota State Medical Ass’n Found., 264 N.W.2d 152, 155 (Minn.1978). In category (3) are “[wjords, which taken by themselves have an innocent meaning, [but] in connection with surrounding circumstances[ ] may convey a defamatory meaning to those familiar with such circumstances.... [In such cases,] [w]hether a defamatory meaning is conveyed is dependent upon how ordinary men understand the language in light of the surrounding circumstances.” Gadach v. Benton County Co-op Ass’n, 236 Minn. 507, 53 N.W.2d 230, 231 (1952) (citations omitted). “If the words are capable of the defamatory meaning, it is for the jury to decide if they were in fact so understood.” Utecht v. Shopko Dep’t Store, 324 N.W.2d 652, 654 (Minn.1982) (citing Gadach, 53 N.W.2d 230). Thus, at the summary judgment stage, the judge must not conclusively interpret a category (3) statement; rather, the judge should only decide whether a statement is capable of being interpreted as defamatory.

When an otherwise innocent statement is interpreted to have a defamatory meaning, it is not unusual to find that meaning referred to as “implied” or “drawn by implication.” See, e.g., Milkovich v. Lorain Journal Co., 497 U.S. 1, 18, 110 S.Ct. 2695, 2705-05, 111 L.Ed.2d 1 (1990) (“If a speaker says, ‘In my opinion John Jones is a liar,’ he implies a knowledge of facts which lead to the conclusion that Jones told an untruth.”); id. at 3, 110 S.Ct. at 2697-98 (holding actionable article “implying that petitioner ... lied under oath in a judicial proceeding”); Phipps v. Clark Oil & Refining Co., 408 N.W.2d 569, 573 (Minn.1987); Lewis, 389 N.W.2d at 889; Janklow v. Newsweek, Inc., 788 F.2d 1300, 1304 (8th Cir.) (en banc), cert. denied, 479 U.S. 883, 107 S.Ct. 272, 93 L.Ed.2d 249 (1986). In the instant case, the district judge held that Minnesota does not recognize “defamation by implication.” The district judge, however, could not have meant to preclude plaintiffs from challenging statements that are non-defamatory on their face but capable of having an “implied” defamatory meaning for it is well accepted that such statements may give rise to a defamation claim under Minnesota law, and we see nothing in the district court’s opinion that discards such well settled law. For example, in Utecht v. Shopko Dep’t Store, the Minnesota Supreme Court held actionable a department store’s placement of a notice at the cash register stating “Shopper’s Charge-Robert Utecht-Do Not Accept.” 324 N.W.2d at 653-54. In Shopko, the court explained that “[t]he circumstances in which the notice was seen by the public necessarily prompted speculation as to why the [“Shopper’s Charge”] card was not to be accepted. Loss or theft are possible explanations but poor credit is an at least equally likely alternative.” Id. at 654; see also Gadach, 53 N.W.2d at 232 (“A jury might well find that this article imputed to plaintiff a crime.”); Phipps, 408 N.W.2d at 573 (statement could imply that gas attendant refused to service customer because she was handicapped).

What Minnesota law refers to as “defamation by implication” occurs when a defendant “ ‘[1] juxtaposes a series of facts so as to imply a defamatory connection between them, or [2] creates a defamatory implication by omitting facts, [such that] he may be held responsible for the defamatory implication, unless it qualifies as an opinion, even though the particular facts are correct.’ ” Diesen v. Hessburg, 455 N.W.2d 446, 450 (Minn.1990) (quoting W. Page Keeton, et al., Prosser & Keeton, Law Of Torts § 116, at 117 (Supp.1988)), cert. denied, 498 U.S. 1119, 111 S.Ct. 1071, 1072, 112 L.Ed.2d 1177 (1991). Thus, the touchstone of implied defamation claims is an artificial juxtaposition of two true statements or the material omission of facts that would render the challenged statement(s) non-defamatory. Under this definition, a defendant does not avoid liability by simply establishing the truth of the individual statements); rather, the defendant must also defend the juxtaposition of two statements or the omission of certain facts.

Perhaps the quintessential modern case of defamation by implication is Memphis Publishing Co. v. Nichols, 569 S.W.2d 412, 419-20 (Tenn.1978), where the court held liable a newspaper that truthfully reported that a woman, upon finding her husband at plaintiffs home, shot the plaintiff. In that case, the article neglected to mention that the plaintiff was hosting a social gathering at the time, thereby implying that the plaintiff and the suspect’s husband were having an affair. Id. at 420. Moreover, the court held that truth of the challenged statements was irrelevant because “[t]ruth is available as an absolute defense only when the defamatory meaning conveyed by the words is true.” Id.

C. TONEY’S DEFAMATION CLAIM

The district court identified seven statements that the broadcast made about Toney: “The Plaintiff is a Class B dealer of dogs; two, the Plaintiff buys dogs and sells some, and among those sold, sales are made to the University of Minnesota; three, according to the USDA’s records, the Plaintiff supplies some thousand dogs per year to the University; four, it’s the Plaintiffs estimate that the University is approximately 20 percent of his business; five, the Plaintiff asserts and states that he seldom gets animals from dog pounds; six, the Plaintiffs 1990 USDA records show that he was telling the USDA information contrary to that which he had-set forth; seven, the USDA confirmed that Plaintiff was under investigation for falsification of his records.” App. at 37.

The first five statements, the district court ruled, “are not only true, but they do not appear in any fashion as a matter of law to be defamatory.” Id. at 38. The court also ruled that the sixth statement, that Toney had told the USDA something contrary to what he had told the station’s reporter, “could be defamatory,” as was the case with the seventh statement that Toney was under investigation for falsification of his records on file with the USDA. Id. at 39. But these two statements, the district court concluded, “[we]re not actionable ....because each is true.” Id.

We do not disturb the district court’s ruling that none of the first five statements was defamatory in and of itself. Similarly, we accept the court’s ruling that the first four statements were literally true. We shall deal below with whether the district court erred by ruling that statement five was true, but we accept its judgment that statement five was not defamatory on its face even if false.

The district court also held that statements six and seven “could be defamatory,” meaning, we suppose, that if otherwise actionable, whether the statements were defamatory would be questions for a jury. Since both statements could be interpreted as impugning the honesty of Toney’s business dealings, we agree with the district court’s characterization of these statements.

Even if defamatory, the district court held statements six and seven not actionable because they were true as a matter of law. We accept this ruling with respect to the seventh statement, but not with regard to statement six — i.e., that Toney’s 1990 records filed with the USDA showed that Toney was telling the government something contrary to what Toney had reportedly said in statement five: that he seldom gets dogs from dog pounds. For the reasons stated below, we doubt that statement six was so plainly true that it could be so characterized as a matter of law.

First, we question whether the four pages exhibited from the 1990 records show that for that year Toney could not reasonably assert that he only “seldom” got dogs from pounds. As Toney argued during the hearing in district court, he handled some 5,000 dogs in 1990, and even if each of the 20 entries on the four pages of record relied on by WCCO indicated that he did get dogs from pounds, that fact would not show that his business with pounds in 1990 occurred more often than “seldom.” App. at 27-28. Moreover, we note that, in a colloquy with counsel, the district judge observed that the “question of whether or not it’s seldom, I guess, becomes kind of an open question.” App. at 27. Toney’s counsel responded: “Yeah, which is a fact question. That’s our whole point.” Id.

Second, even if the filed records for 1990 could establish that Toney dealt with pounds more often than seldom, the interview with Toney which contained statement five was held in 1992, and his reported statement was that he seldom “gets” dogs from pounds. Thus, it is at least doubtful that what was true in 1990 was also true in 1992.

Third, in his affidavit opposing summary judgment, Toney swore, and maintains on appeal, see Brief of Aplt. at 17, that he did not “state to WCCO-TV that I seldom got my dogs from pounds as alleged or asserted in the televised report. I explained the source of each and every dog that was questioned or inquired about by the WCCO reporter.” App. at 49. Laurie Stern, the producer of the program, filed an opposing affidavit stating that “Julian Toney told me during the interview that he rarely obtained dogs from dog pounds.” Supp.App. of Aplee. at 11. Aside from the significant use of the word “rarely” in place of the word “seldom” (the word allegedly used by Toney in the' interview), the two affidavits are in conflict. Of course, if Toney never made statement five, it could hardly be termed true, as the district judge held; and, if never made, WCCO’s fabrication of the statement only compounds the possible defamation.

On appeal, Toney claims that, at the very least, the conflict between the two affidavits should be resolved by a jury, not by the district judge’s ruling that, as a matter of law, statement five was in effect made and was true. In explaining his ruling on this point, the district judge said:

Now, according to the pleadings, many of the above statements were supplied by the Plaintiff himself in an interview. Whatever the source, the first five statements do not appear to be in contest. They are in fact true by all assertions. There is some question exactly whether or not he made exactly the statements, but there is no substantial dispute about the actuality. He said he seldom gets animals from dog pounds, and all the rest of those facts, I think, are clearly agreed to be stated as they have been stated.

App. at 37-38.

This is hardly a crystal clear basis for the resolution of conflicting affidavits at the summary judgment stage. Even if the judge had a satisfactory, but unstated, explanation for holding that Toney uttered statement five, that explanation would fall considerably short, as indicated above, of establishing the truth of statement six — i.e., that statement five is inconsistent with the records filed with the USDA for 1990.

Thus, we cannot affirm the judgment granting WCCO’s motion for summary judgment on the defamation count of the complaint insofar as it deals with statement six. To that extent, we reverse the district court’s judgment on Toney’s defamation claim and remand this ease for further proceedings consistent with this opinion. We otherwise affirm the district court’s disposition of Toney’s defamation claim.

D. MINNESOTA LAW ON DEFAMATION BY IMPLICATION

As indicated above, the district court held that Minnesota law does not provide a cause of action for defamation by implication. We have also pointed out that we do not interpret this ruling as applying to statements that are not defamatory on their face but could convey a defamatory meaning. If it did so apply, we indicated that we could not agree. The court’s ruling, however, clearly applies to the category of implied defamation described by Prosser & Keeton and repeated by the Minnesota Supreme Court in Diesen, 455 N.W.2d at 450. See p. 387, supra. We conclude that the district court erred in this respect.

At one point during its oral opinion, the district court said that “the State of Minnesota in no reported case has ever recognized slander by implication.” App. at 41. This statement might be read to mean that if the Minnesota Supreme Court had not expressly provided such a cause of action, this was the end of the search for Minnesota law. As we recently underscored, however, the determination that the state supreme court has not decided the relevant legal question only begins — rather than ends — our inquiry:

If [a State’s] Supreme Court has not addressed the issue, we must determine what that court would probably hold were it to decide the issue. In making this determination, we may consider relevant state precedent, analogous decisions, considered dicta, scholarly works and any other reliable data.

Farr, 61 F.3d at 679 (citing Continental Ins. Co., 8 F.3d at 1291).

In the end, however, the district court held that in Diesen, supra, the Minnesota Supreme Court had “rejected a slander by implication claim.” App. at 41. The trial court was also of the view that the Eighth Circuit had twice before done so, see Price v. Viking Penguin, Inc., 881 F.2d 1426, 1432 (8th Cir.1989), cert. denied, 493 U.S. 1036, 110 S.Ct. 757, 107 L.Ed.2d 774 (1990); Janklow, 788 F.2d at 1304, id., and hence declined “to recognize the cause of action which has been rejected in this circuit and in the Minnesota Supreme Court.” App. at 42.

We disagree with the district court’s reading of Diesen. In that case, a county attorney (Diesen) claimed that a newspaper published a series of articles that defamed him by implication through inaccurately portraying his prosecution of domestic violence. The jury found for Diesen on the ground that “the implication of the articles published by [the newspaper was] substantially false.” 455 N.W.2d at 449 (internal quotations omitted). The trial court overturned the jury verdict on a motion for JNOV, finding that the statements in the article were true as a matter of law and were constitutionally protected opinion. The Court of Appeals reinstated the jury verdict, noting that the omission of certain facts created a false and defamatory implication. Finally, the Minnesota Supreme Court reversed the Court of Appeals, holding that “an allegedly false implication arising out of true statements is generally not actionable in defamation to a public official.” Id. at 452. Although there was a judgment to this effect, it remains arguable whether there was a majority opinion to support it. For present purposes, however, we will assume that the sentence just quoted, taken from Chief Justice Popovich’s opinion, represented the views of a majority of the Minnesota Supreme Court.

After quoting Prosser and Keeton’s definition of implied defamation claims, the Chief Justice’s opinion ejqplained that “this reference is to common law libel in the absence of constitutional concern for fair comment on public officials. The United States Supreme Court has established an important distinction between private and public official plaintiffs for defamation purposes.” 455 N.W.2d at 450. Moreover, in excluding comments about public officials from the scope of actionable defamation by implication, Diesen invoked New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S.Ct. 710, 720-21, 11 L.Ed.2d 686 (1964), and explained that criticism of public officials “is a necessary and positive element of our democracy and, as a result, a public official may suffer injury to his or her professional reputation without recovery under defamation law because of the paramount free speech and free press rights at stake.” Id. Diesen did not dispute Prosser & Keeton’s description of the common law’s acceptance of defamation by implication; rather, it simply held the common law rule inapplicable to public officials. The Chief Justice’s opinion also relied on the Eighth Circuit’s decisions in Price and Janklow, which it viewed as rejecting actions for defamation by implication brought by public figures, id. at 451; as we see it, the opinion interpreted those cases as precluding only those implied defamation actions brought by public officials.

Although a federal district court interpreted Diesen as rejecting defamation by implication claims for both private and public figures, see Kortz v. Midwest Communications, Inc., 20 Med. L. Rep. 1860, 1865 (D.Minn.1992), we read Diesen as in no way questioning whether private persons can bring implied defamation claims. This was true of the Chief Justice’s opinion as well as the opinions of the concurring and dissenting Justices.

Had the majority opinion in Diesen intended to negate a cause of action for the kind of implied defamation at issue here (i.e., private plaintiff cases), it seems odd that it did not mention or comment on Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn.1987), decided three years before Diesen and affirming the judgment of the Minnesota Court of Appeals, 396 N.W.2d 588 (Minn.Ct.App.1986). That ease, as we read it, involved a defamatory implication created by omitted facts. The facts of the case, taken from those recited by the Court of Appeals, are these:

Mark A. Phipps was employed by Clark Oil Refining Corporation as a cashier at a self-service gas station. On November 17, 1984, a customer drove into the station and asked him to pump leaded gasoline into her 1976 Chevrolet-an automobile equipped to receive only unleaded gasoline. Phipps’ manager, respondent Leroy Chmielewski, told Phipps to comply with the customer’s request, but Phipps refused, believing that dispensing leaded gasoline into the gas tank was a violation of law. See Clean Air Act, 42 U.S.C. § 7401-7642. Phipps was willing to pump unleaded gas into the customer’s automobile; nevertheless, Chmielewski immediately fired him.
In response to an inquiry by the Minnesota Pollution Control Agency, Clark Oil’s management stated that Phipps was fired because he had been rude to customers on several occasions and “may have refused to provide full service to a handicapped customer.”
Phipps brought this action against his employers (referred to collectively as Clark Oil), seeking damages for wrongful termination and defamation. Clark Oil moved for judgment on the pleadings____ The trial court granted Clark Oil’s motion, stating that Minnesota law allowed Phipps, an employee-at-will, to be terminated for any reason or for no reason. The court found that the statement explaining Phipps’ discharge was not defamatory as a matter of law because it was not the type of statement which tended to injure Phipps’ reputation in the community. Further, the court held that Phipps had, by the allegations in his complaint, admitted the truth of the statement.

396 N.W.2d at 589-590. The Court of Appeals reversed, holding that in these circumstances public policy required an exception to the right of an employer to discharge at-will employees and that significant fact issues underlay the defamation claim so as to foreclose dismissal on the pleadings. Id. at 595.

The Supreme Court of Minnesota unanimously affirmed that judgment. The court noted Phipps, insistence that the employer’s statement implied that he discriminated against the customer because she was handicapped. 408 N.W.2d at 573. The court ruled that since truth as a defense goes to the underlying implication of the defendant’s statement, judgment for Clark Oil was erroneous if the statement “may be defamatory if false.” Id.

As for being defamatory, the court outlined the principle set forth earlier that words may be divided into those that cannot possibly have a defamatory meaning, those that may reasonably have a defamatory meaning as well as an innocent one, and those that are clearly defamatory on their face, id. (quoting Church of Scientology, 264 N.W.2d at 155). The Phipps court underscored that the words at issue must be given their obvious and natural meaning, and held that Clark Oil’s explanation for firing Phipps could be found to have a defamatory meaning. Id. As for the falsity of the alleged “underlying implication,” the court noted that Phipps asserted that the customer’s ear was designed for unleaded fuel only, which he was ready to dispense, but the customer insisted on leaded gasoline which Phipps refused because it was against federal law. The court thus concluded that judgment on the pleadings was inappropriate. Id.

It is evident from the Phipps opinion that what made the oil company’s statement arguably defamatory was that it could be taken to imply that Phipps refused service because the customer was handicapped. Furthermore, what made the statement reasonably defamatory was the withholding of facts which, if disclosed along with the statement, would have foreclosed the defamatory inference; moreover, those facts would also have rendered that inference false. We accordingly conclude that the Minnesota Supreme Court has already recognized a cause of action for eases where the defamatory implication arises from omitted facts.

Even if we read Phipps as leaving open whether the Minnesota Supreme Court would extend a cause of action to a private plaintiff alleging defamation by implication as described by Prosser & Keeton, we still conclude that the court would recognize a cause of action for implied defamation where a defendant omits important facts or where the defendant juxtaposes a series of facts so as to imply a defamatory connection between them. Our reasons are these:

1. Importantly, none of the Justices in Diesen questioned that the Prosser & Keeton statement represented the common law, which is evidenced by the lack of controlling authority limiting the availability of such a cause of action to a private plaintiff. Moreover, the common law historically recognized defamation by implication as it broadly framed the inquiry as whether the publication contains a defamatory meaning. See Prosser & Keeton On The Law Of Torts, supra, § 111, at 780-781. Thus, “[a] publisher is, in general, liable for the implications of what he or she has said or written, not merely the specific, literal statements made.” Robert D. Sack & Sandra S. Barron, Libel, Slander And Related Problems 85 (2d ed.1994).

2. For its holding that a private plaintiff has no cause of action for defamation by implication, the district court relied not only on Diesen, erroneously we think, supra at 390, but also on Price v. Viking Penguin, Inc., 881 F.2d 1426, 1432 (8th Cir.1989), cert. denied, 493 U.S. 1036, 110 S.Ct. 757, 107 L.Ed.2d 774 (1990), and Janklow v. Newsweek, Inc., 788 F.2d 1300, 1304, (8th Cir.1986) (en banc), cert. denied, 479 U.S. 883, 107 S.Ct. 272, 93 L.Ed.2d 249 (1986). As decisions of this circuit, one of which was en bane, we certainly give them considerable weight in determining how the Minnesota Supreme Court would decide the issue we are pursuing. For three reasons, however, we find the district court’s reliance on these two cases unpersuasive. First, as we have observed, supra at 391, Chief Justice Popovich’s opinion in Diesen cited Price and Janklow only for the proposition that public figures may not sue for defamation by implication. Second, we do not read either Price or Janklow as holding that even public figures can never maintain such a cause of action. Third, even if we are wrong in our reading of Price and Janklow, those eases would no longer control our analysis in the wake of Milkovich v. Lorain Journal Co., 497 U.S. 1, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990).

In Janklow, the Governor of South Dakota brought a defamation action against Newsweek magazine. The district court held that the claimed defamatory material was protected opinion under the First Amendment. This court, sitting en banc after a panel reversed the district court, agreed with the district court that the alleged libel was protected opinion. In arriving at that conclusion, the court employed a four-factor analysis for determining whether a statement constitutes fact or protectible opinion. Id. at 1302-03. As to the first factor of this inquiry, precision and specificity, Janklow explained that the defamatory meaning attributed to the statement at issue could only be drawn by “implication,” explaining that the challenged “sentence was not nearly so precise as a direct accusation.” Id. at 1304. Because the defamatory meaning was not apparent on the face of publication, i.e., could only be drawn by implication, Janklow concluded that the challenged statement’s relative imprecision counselled in favor of viewing the statement as protected opinion. After examining the other three factors, Janklow ruled that the statement at issue was an opinion protected by the First Amendment.

In our view, Janklow’s discussion of the precision and specificity factor of its four-part inquiry does not hold that all defamatory implications are necessarily too imprecise to be considered factual and not opinion. But as will be seen, Price appears to hold otherwise. However that may be, Janklow emphasized that the four factors “must be considered together, that no solitary criterion can be dispositive, and that ultimately the decision whether a statement is fact or opinion must be based on all the circumstances involved.” Id. at 1304. Thus, had Janklow held that the three other factors besides precision and specificity indicated that the statement at issue was not a protected opinion, the discussion of the first factor would have become irrelevant. The Governor could then have relied on the traditional rule that plain words, even if seemingly innocent, may carry an actionable defamatory implication. And, of course, a private plaintiff could similarly rely -on this rule.

In Price, FBI agent David Price claimed that a book written about his conduct at the Pine Ridge Indian Reservation in South Dakota defamed him in various ways. To determine whether some or all of the allegedly defamatory statements were protected opinion, the Price court applied Janklow’s four-factor test. In analyzing the first factor, precision and specificity, the Price court, citing Janklow 788 F.2d at 1304 said, “We do not recognize defamation by implication.” Although the district court viewed this sentence as relevant to the instant ease, as we see it, this sentence applies only in the process of applying factor one. It does not apply where the statement at issue is plainly factual or is held not to be protected opinion. This sentence does indicate that Janklow held that in applying factor one, no defamatory implication from the plain words of the statement at issue is ever permissible. Price’s discussion, 881 F.2d at 1439-1440, of the allegedly defamatory treatment in the book of the testimony of a government witness, Louis Moves Camp, supports that reading of Janklow. Price, however, did not purport to depart from Janklow’s holding that no one of the four factors is dispositive in the fact/opinion inquiry. Hence, as we said about Janklow, supra, at 393, the lack of precision of a statement cannot itself determine whether it is protected opinion because the other three factors could lead to the conclusion that the statement is not a protected opinion and is subject to the ordinary rule in defamation eases — that is, that the plaintiff may support his case by relying on a reasonable implication from the plain language of a particular statement or statements.

Finally, even if the Janklow/Price opinion analysis would necessarily bar all defamation by implication claims (a suggestion we emphatically reject), in light of Milkovich v. Lorain Journal Co., 497 U.S. 1, 19, 110 S.Ct. 2695, 2706, 111 L.Ed.2d 1 (1990), we are no longer bound to that result. In Milkovich, the Supreme Court rejected “the number of factors developed by lower courts” used to provide constitutional protection for opinion. This development was “in mistaken reliance” on the dictum in Gertz v. Robert Welch, Inc. that “under the First Amendment there is no such thing as a false idea.” 418 U.S. 323, 339-40, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789 (1974). Milkovich explained that the existing constitutional doctrines provided for the necessary “breathing space” for freedom of expression, that a dichotomy between fact and opinion was artificial, and that “an additional separate constitutional privilege for ‘opinion’, [was] not required to ensure the freedom of expression guaranteed by the First Amendment.” 497 U.S. at 21, 110 S.Ct. at 2707. Instead, for a statement to be actionable, the inquiry is whether the statement is factual and provable. Accordingly, even if Janklow or Price suggested that implications are constitutionally suspect, Milkovich made clear that implications, like plain statements, may give rise to a defamation claim. Indeed, Milkovich ultimately held that “a reasonable fact finder could conclude that the statements [at issue] imply an assertion that petitioner Milkovich perjured himself ....[and that] th[is] connotation is sufficiently factual to be susceptible of being proved true or false.” Id. This holding applies to public officials as well as to private plaintiffs. See Beverly Hills Foodland, Inc. v. United Food and Commercial Workers Union, Local 655, 39 F.3d 191, 196 (C.A.8 1994).

3. We note also that earlier in the Price opinion, the court said that “[w]here the plaintiff is not a public figure, a different balance is struck.” 881 F.2d at 1430 (citations omitted). That is, where private plaintiffs are concerned, there are no considerations comparable to those that limit redressing defamatory implications where public officials or public figures are plaintiffs, surely none powerful enough to outweigh what most people consider a major factor in a satisfactory existence-their reputation. We have no reason to think that the Minnesota Supreme Court would feel otherwise.

4. One of the two parts of Prosser & Keeton’s definition of common law defamation by implication is the omission of facts; that is, had the facts been stated, there would have been no defamation. In such a case, as in Phipps, the challenged statements, or as they reasonably would be understood, defamed the plaintiff, who claims that they are defamatory and false by virtue of omitted facts. Especially since it is now the private plaintiff’s burden to prove falsity, at least in eases dealing with a matter of public interest, surely the plaintiff should and would be permitted to prove a statement false by revealing the facts omitted by the publisher. To hold otherwise would allow publishers (i.e., would-be-defamers) to accomplish indirectly what they could not do directly.

5. The juxtaposition of facts in such as way as to imply a defamatory connection between them is the other part of the Prosser & Keeton definition of defamation by implication. As to this part, we are not in position to make a Phipps-like claim that a Minnesota Supreme Court decision so closely satisfied the classic description of this type of defamation by implication as to settle the issue. We must therefore predict how the Minnesota Supreme Court would rule on the issue. Of course, if the actionability of defamation by omitting facts has been settled by Phipps, that would perhaps persuade the court also to approve the other part of Prosser & Keeton’s definition of implied defamation.

6.We are also persuaded by a decision in the Minnesota Appeals Court that was cited by the dissenting opinion in Diesen. That case, Karnes v. Milo Beauty and Barber Supply Co., 441 N.W.2d 565 (Minn.Ct.App.1989), closely tracks the juxtaposition brand of implied defamation. In that ease, Milo, a cash and carry store, began to suspect employee theft. Maddox, the head of accounting and auditing, ultimately wrote a note to his superior indicating that store 190 continued to have unsigned void slips whose sales were not rerung. The memo listed by day the number of voids and the total amount of the voided sale. The memo concluded:

Store # 190 is taking (stealing) money from the cash register drawer. How much more noncompliance must we tolerate from Nan Karnes?

Id. at 567. The memo was circulated to several people including Karnes’ immediate supervisor, who was instructed to terminate Karnes. This occurred, and Karnes brought suit, claiming defamation based on the Maddox memo. A jury returned a special verdict for Karnes. Milo appealed, challenging the verdict as, inter alia, manifestly contrary to the evidence. The court rejected this challenge:

In his first statement (“Store # 190 is taking (stealing) money from the cash drawer”), Maddox does not directly accuse Karnes of theft. He nevertheless accuses Store # 190, which presumably could be anyone employed by the store---- The next sentence (“How much more noncompliance must we tolerate from Nan Karnes?”) directly accuses Karnes of “noncompliance”, presumably with store procedures..’ these statements could be interpreted by a jury as implying that Karnes was either stealing or allowing stealing to take place.

Id. at 568. Recognizing that Milo’s defense of truth did not go to the underlying implication, the Court of Appeals did not disturb the jury verdict in this respect. 441 N.W.2d at 568 (citing Lewis, 389 N.W.2d at 889).

7. Finally, we conclude that Minnesota law would allow for implied defamation claims based on the artificial juxtaposition of two statements on the ground that defamation law traditionally has required a statement to be construed in light of a document as a whole. A basic rule of defamation law is that courts must construe a statement in light of its context and surrounding circumstances. See Jadwin v. Minneapolis Star and Tribune Co., 367 N.W.2d 476, 491 (Minn.1985) (citing Restatement (Second) of Torts § 563 comment d (1976)). In Tawney v. Simonson, Whitcomb & Hurley Co., the Minnesota Supreme Court set forth this well established principle:

The question is not whether that article can be divided into two parts, and each of those parts so analyzed separately from each other that each would appear to be free from defamatory meaning. The article must be construed as a whole.

109 Minn. 341, 124 N.W. 229, 233 (1909) In our view, the natural corollary to this rule is that two artificially juxtaposed statements can give rise to an actionable implication. Put differently, we cannot conclude that Minnesota law would distinguish between (1) a private person who was defamed by a single statement that became defamatory when read in context; and (2) a single statement that created a defamatory implication when artificially juxtaposed with another statement.

TV. CONCLUSION

In sum, we AFFIRM in part and REVERSE in part the district court’s judgment that WCCO deserved judgment as a matter of law on Toney’s defamation claim. We REVERSE the district court’s judgment that Minnesota law does not provide private persons with a claim for defamation by implication. This case is remanded for further proceedings consistent with this opinion.

It is so ordered.

      . On appeal, WCCO moved to supplement the record to include an Administrative Law Judge's opinion finding that Toney falsified his records. However, as we limit out review to the district court’s ruling in this case, we deny WCCO's motion, reserving its right to renew this motion before the district court.

      . The classic example of this type of defamation was "Horace Greeley’s well-known words concerning James Fenimore Cooper, 'He will not bring the action in New York, for we are known there, nor in Otego, for he is known there' [which] were held to carry the imputation of bad repute in Otego.” W. Page Keeton et al., Prosser & Keaton On The Law Of Torts § 111, AT 781 (5th ed.1984) (quoting Cooper v. Greeley, 1 Denio 347, 348 (1845)).

      . Notably, the interpretation of the challenged statement in Shopko — i.e., the determination that it was susceptible to a defamatory meaning-relied on extrinsic circumstances. The Minnesota Supreme Court acknowledged this fact and explained that such cases are actionable, terming them cases of "defamatory innuendo." 324 N.W.2d at 653-54. Employing the term "defamatoiy innuendo” to describe such cases can be confusing because in common usage, the terms "innuendo” and "implication” are often used synonymously (somewhat like "implication” and “interpretation”); however, in the common law of defamation, they are "critically different.” Robert D. Sack & Sandra S. Baron, Libel, Slander, And Related Problems, 88-89 (2d ed. 1994).

      . In doing so, we note our observation made in Part III B that the possible defamation involved in the two statements could not have been deemed by the district court to be defamation by implication since the court proceeded to hold that there were no such cause of action under Minnesota law.

      . In the wake of Diesen, the status of defamation by implication actions brought by public figures remains unclear. At first blush, Diesen appears to command a majority for Part II of Chief Justice Popovich's opinion. That is, two judges joined the entirety of Chief Justice Popovich's opinion and Justice Simonett, concurring specially, joined Part II of that opinion. (Justice Coyne concurred only in the judgment and two other Justices dissented.) Part II set forth three grounds for reversal: (1) public officials have no cause of action sounding in defamation by implication (at least as defined by Prosser & Keaton); (2) the claimed defamation by implication was constitutionally protected opinion; and (3) the published material was privileged under state defamation law. Although the first sentence of Justice Simonett’s concurring opinion states that he concurred in Part II of the Chief Justice's opinion, the remainder of his concurrence explained that plaintiff's cause of action failed because he did not establish that the articles omitted certain "predicate facts" that "would have refuted the implication of prosecutorial unfitness,” id. at 455-a view consistent with the theory of defamation by implication. Picking up on this inconsistency, one commentary stated that "it questionable whether a majority [of the Dies-en court] actually endorsed" the rule that public figures cannot maintain an action for defamation by implication. C. Thomas Diesen & Lee Levine, Implied Libel, Defamatory Meaning, and State of Mind: The Promise of New York Times v. Sullivan, 78 Iowa L.Rev. 237, 307 n. 349 (1993).
      Not surprisingly. Diesen has left courts and commentators confused over the exact status of public figure defamation by implication actions. See Conroy v. Kilzer, 789 F.Supp. 1457, 1460 (D.Minn.1992) ("Given the fragmentation of the Diesen court, it is difficult to state with certainty Minnesota’s rule regarding libel by implication.”). Some commentators take Diesen at face value, accepting its repudiation of public figure defamation by implication actions. See, e.g., Dienes & Levine, supra, 78 Iowa L. Rev. at 306. Others, possibly in light of Justice Simonett’s concurrence, read Diesen as joining those courts that have limited public figure defamation by implication claims to those where a media defendant omits a specific statement that would have refuted the defamatory implication. See, e.g., Sack & Baron, supra, at 87 n. 100. Yet other commentators, noting that Diesen ruled on several grounds and commented that defamatory implications are generally not actionable by public officials, highlight that Diesen does not "foreclose completely the possibility that true statements creating a false impression [through an artificial juxtaposition or omitted facts] could fulfill the requirement of falsity.” Kathryn S. Banashek, Comment, Can A Public Figure Win A Libel Suit When The Media Reported the Truth?-Defamation and False Impressions, 69 WASH. U. L.Q. 1009, 1019 (1991). Nonetheless, regardless of what Diesen portends for defamation by implication actions by public figures, it does not preclude private persons from advancing such claims.

      . Neither party to this appeal cited the Phipps decision in the Minnesota Supreme Court. However, both parties did reference the Minnesota Court of Appeals decision. See Brief of Aplee. at 20 n. 10; Brief of Alt. at 8. Appellee’s cursory remarks about the case are not altogether accurate, but as a whole they are not inconsistent with the proposition that the Phipps case fits the description of implied defamation by omitting material facts.

      . The relevant commentary appears to have also reached this conclusion. For example, Abner Mikva, former chief Judge of the D.C. Circuit, stated that Milkovich implicitly rejected the four factor “totality of the circumstances” test in favor of a single inquiry into whether the alleged defamatory statement is actionable. Abner J. Mikva, In My Opinion Those Are Not Facts, 11 Ga. St. U.L.Rev. 291, 299 (1995); see also David M. Cohn, Comment, The Problem of Indirect Defamation: Implication, and innuendo, 1993 U. Chi. Legal F. 233, 239-40 (1993) ("Milkovich forecloses [the analysis taken by price]; under Milkovich, the statements [at issue in Price] would not have qualified as protected opinion because the charges were provable as false.”); Lisa M. Montpetit, Comment, Changes in Defamation Law for the Eighth Circuit, 17 Wm. Mitchell L.Rev. 785, 814 (1991) (lanklow test is "obsolete” and "has been replaced”).
      Nonetheless, even if the Janklow four-factor test is no longer dispositive, some courts have bound it instructive in determine whether a statement is capable for being proved false. See McGrath v. TCF Bank Savings, fsb, 502 N.W.2d 801, 808 (Minn.Ct.App.) (four factor test "helpful”), modified on other grounds, 509 N.W.2d 365 (Minn.1993); Huyen v. Driscoll, 479 N.W.2d 76, 80 (Minn.Ct.App.1991) (Milkovich narrowed scope of opinion privilege, but four factor test "instructive”); Unelko. Corp. v. Rooney, 912 F.2d 1049, 1053 (9th Cir.1990) (even though Milkovich overruled prior analysis, the four factor test still "relevant” in discerning whether a statement is provable as false).

      . Again, we note that Janklow, Price, and Milkovich all used the concepts of "implication” and "interpretation” interchangeably. For example, Price explained that "[w]hile Price attaches an implication to the sequence of events as the book presents them, it is obvious that more than one interpretation is possible." 881 F.2d at 1439 (emphasis added); see also id. at 1432 n.4 ("a state may not impose liability simply because clearer language or the inclusion of additional reports would rule out an objectionable implication.”). However, while Price clearly viewed accusations "drawn by implication” to be more readily protectible as opinion, Milkovich made no such distinction, explaining that "the statement ‘In my opinion, Jones is a liar' can cause as much damage as the statement ‘Jones is a liar. ’ " 497 U.S. at 19, 110 S.Ct. at 2706.

      .After invoking Milkovich, Beverly Hills Foodland, Inc. v. United Food and Commercial Workers Union, Local 655 recognized that implications may give rise to a defamation claim insofar as they were provable as false; that is, Beverly Hills explained: "Because the statement contained in the handbill was not a false statement of fact, nor could it reasonably be read as such, the statement must necessarily be characterized as non-defamatory.” 39 F.3d 191, 196 (C.A.8 1994) (emphasis added).
      Furthermore, based on his view that the Supreme Court had implicitly rejected the facl/opinion dichotomy, Justice Yetka's Diesen dissent explained that: "Because the ‘We do not recognize defamation by implication’ statement in Price, 881 F.2d at 1432, was made in connection with the Janklow/Ollman [v. Evans, 750 F.2d 970 (D.C.Cir.1984)] opinion analysis, it has been [implicitly] rejected by the United States Supreme Court and should, therefore, be rejected by this court.” 455 N.W.2d at 462.

      . Karnes lost the case, however, because Milo had a privilege which Karnes did not negate by successfully proving actual malice.

      . Thus, in pursuing on remand the "juxtaposition” brand of defamation by implication, Toney may rely on parts of the broadcast other than the seven statements listed by the district court in passing on his defamation claim and dealt with in Part IIIC, supra.


source: Caselaw Access Project

author: FAGG, Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. Austin Hillman MARKS, Appellant.
    No. 95-3376EM.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 15, 1996.
    Decided June 7, 1996.

      Curtis Blood, Collinsville, Illinois, argued, for appellant.
    Larry H. Ferrell, Assistant U.S. Attorney, Cape Girardeau, Missouri, argued, for appellee.
    Before FAGG, WOLLMAN, and LOKEN, Circuit Judges.
   FAGG, Circuit Judge.

Having pleaded guilty to traveling in interstate commerce in a murder-for-hire scheme, Austin Hillman Marks challenges the district court’s compliance with Rule 11 of the Federal Rules of Criminal Procedure. Marks also claims for the first time on appeal that his trial counsel failed to provide effective assistance. We affirm.

Marks claims the district court did not adequately question him about the medications he was taking to ensure that he was mentally competent to enter a knowing and intelligent guilty plea. See Fed.R.Crim.P. 11(d). Marks’s contention is foreclosed by our opinion in United States v. Dalman, 994 F.2d 537, 538-39 (8th Cir.1993). After learning Marks had taken some medications before appearing in court to change his plea on the fourth day of a jury trial, the district court clarified that the medications consisted of an antidepressant, pain reducers, and relief for stomach ulcers. The district court then inquired whether the medications had affected Marks’s ability to understand the plea proceeding, the plea agreement, and the district court’s questions and explanations. Marks assured the district court they had not. The district court asked Marks’s trial counsel if she had any doubt about her client’s ability to enter a knowing and intelligent plea, and counsel responded that she did not. The record shows Marks’s performance during the plea proceeding was entirely consistent with his assurance that he was in control of his faculties. Indeed, Marks neither argued in the district court nor on appeal that he was under the influence of his medications, that the medications were mind altering, or that the medications affected his ability to make a knowing and intelligent plea. Also, the district court had observed Marks’s behavior during three days of trial, including his lengthy testimony as a witness on his own behalf. Contrary to Marks’s complaint that the district court did not probe deep enough, we conclude the district court’s inquiry was sufficient for the purposes of Rule 11. Id.

Marks also claims the district court failed to satisfy the requirements of Rule 11(c)(1). According to Marks, the district court misled him about the sentence he could receive. We disagree. The district court specifically informed Marks that the maximum statutory penalty for Marks’s crime was ten years. In explaining that Marks’s case was covered by the sentencing guidelines, the district court made clear that whether Marks would receive a lesser sentence than ten years would not be known until “a presentence report [was] prepared and [the judge] had a chance to review the guidelines.” In accepting Marks’s guilty plea, the district court was not obligated to inform Marks of the applicable guideline range or the actual sentence he would receive. United States v. Burney, 75 F.3d 442, 445 (8th Cir.1996). Again, we are satisfied the district court discharged its Rule 11 burden.

Finally, Marks claims his trial counsel was ineffective during the plea proceeding. Ordinarily, a claim of ineffective assistance cannot be raised for the first time on appeal because the claim requires the development of facts outside the original record. United States v. Martin, 62 F.3d 1009, 1012 (8th Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 1556, 134 L.Ed.2d 657 (1996). Marks’s case is an exception to this rule, however, because his arguments are governed by the record before us. Thus, we will consider Marks’s claim under the two-part test announced in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). See Hill v. Lockhart, 474 U.S. 52, 58-59, 106 S.Ct. 366, 370-71, 88 L.Ed.2d 203 (1985).

Marks first contends his trial counsel was ineffective because she failed to insist that the district court make an adequate Rule 11 inquiry into the potential effect of Marks’s medications on his ability to understand the plea proceeding. We have concluded, however, that the district court’s questioning was sufficient for the purposes of Rule 11. That being so, counsel’s failure to demand compliance with Rule 11 cannot be ineffective assistance. See Thomas v. United States, 951 F.2d 902, 904 (8th Cir.1991) (per curiam).

Marks also contends he received ineffective assistance because trial counsel failed to tell Marks the ten-year maximum sentence was the only possible sentence in Marks’s case, and if he had known this, Marks asserts he would not have pleaded guilty. If trial counsel had told Marks what Marks claims he should have been told, counsel would have misled her client. As shown by the sentencing transcript, if Marks’s objections to the presentence report had been sustained, the reduced guidelines range sought by Marks would have permitted a sentence of less than ten years. Additionally, the Government in exchange for Marks’s guilty plea dismissed another charge that could have increased Marks’s guidelines sentence above the statutory maximum for the charge to which he pleaded guilty. In short, the record goes against the grain of Marks’s claim that “there was no conceivable reason for [him] to plead guilty.” Because Marks has not shown “there is a reasonable probability that, but for counsel’s errors, [Marks] would not have pleaded guilty and would have insisted on going to trial,” Hill, 474 U.S. at 59, 106 S.Ct. at 370, we reject Marks’s ineffective assistance of counsel claim.

We affirm the district court.


author: LOKEN, Circuit Judge.

text:
    Jeff RAVENSCRAFT; Martha Ravenscraft, Plaintiffs-Appellants, v. HY-VEE EMPLOYEE BENEFIT PLAN AND TRUST; Hy-Vee Food Stores, Inc., Defendants-Appellees.
    No. 95-2747.
    United States Court of Appeals, Eighth Circuit.
    Submitted Dec. 14, 1995.
    Decided June 7, 1996.

      Gregg Geerdes, Iowa City, IA, argued, for appellant.
    Kathleen L. Nutt, argued (Kermit B. Anderson, on brief), Des Moines, IA, for appellee.
    Before BOWMAN and LOKEN, Circuit Judges, and WOLLE, Chief District Judge.

      The HONORABLE CHARLES R. WOLLE, Chief Judge of the United States District Court for the Southern District of Iowa, sitting by designation.

   LOKEN, Circuit Judge.

Martha and Jeff Ravenscraft challenge the denial of benefits under a health care plan governed by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. (“ERISA”), claiming that Martha’s employer improperly amended the plan and then terminated coverage of medical expenses for infertility treatments. The district court granted summary judgment dismissing their ERISA claims, and the Ravenscrafts appeal. We affirm.

Martha Ravenscraft is employed by Hy-Vee Food Stores, Inc. (“Hy-Vee”). She and her husband Jeff are eligible for health benefits under the Hy-Vee Benefit Plan and Trust (the “Plan”), an employee welfare benefit plan under ERISA. See 29 U.S.C. § 1002(1). Martha underwent a tubal ligation sterilization procedure in 1986, but by the Spring of 1992 the Ravenscrafts had decided they would like to have another child.

Because the Plan does not cover medical expenses to reverse voluntary sterilization, Martha inquired whether the Plan would cover in vitro fertilization (“IVF”) treatment, a procedure that in some cases has achieved conception without surgically reversing prior sterilization. The Plan’s Benefit Coordinator responded, “it appears the treatment would be a covered benefit [under] our plan, subject to all plan provisions.” The Ravenscrafts then began IVF treatment at the University of Iowa Hospitals. Between May and August 1992, they completed one unsuccessful IVF treatment cycle and terminated a second cycle due to an unrelated health problem. The parties agree that each IVF cycle is a separate treatment that may or may not result in pregnancy.

In the Fall of 1992, Hy-Vee’s Board of Directors concluded that it is inconsistent to cover IVF expenses but not sterilization reversal expenses. Accordingly, they amended the Plan to provide that no benefits would be paid to promote conception if the patient previously underwent voluntary sterilization. The Ravenscrafts received notice of this amendment in December 1992, and Jeff telephoned to complain about the change in coverage. The amendment took effect on January 1, 1993, and the Ravenscrafts cancelled IVF procedures scheduled for January 8. On January 12, their attorney wrote the Plan Director demanding that the Plan “restore infertility treatment benefits.” She responded that Hy-Vee had properly exercised its right to change the terms of the Plan.

The Ravenscrafts commenced this action in state court in February 1994 against Hy-Vee and the Plan. Defendants removed, and both sides moved for summary judgment. The district court granted defendants’ motion, dismissing the complaint in its entirety. The Ravenscrafts appeal the dismissal of their ERISA claims.

1. In the district court, the Ravenscrafts argued that the Plan amendment eliminating coverage of IVF treatment expenses is invalid because Hy-Vee’s disclosure that it reserves “the right to change or terminate the Plan at any time” does not comply with ERISA’s disclosure requirement. See 29 U.S.C. § 1102(b)(3). On appeal, the Ravens-crafts concede that this argument is foreclosed by Curtiss-Wright Corp. v. Schoonejongen, — U.S. -, - - -, 115 S.Ct. 1223, 1228-29, 131 L.Ed.2d 94 (1995), which held that a disclosure generally reserving the employer’s right to amend the plan satisfies § 1102(b)(3). However, the Ravenscrafts argue that defendants nonetheless violated ERISA disclosure obligations because they did not disclose that the Plan’s trustees must finally approve Plan amendments that “change substantially the powers, duties, or liabilities of the Trustees,” including amendments changing Plan benefits.

We doubt that the proper remedy for such a disclosure violation would be to invalidate the plan amendment. But we put that question aside because the Ravenscrafts’ disclosure theory fails on the merits. The Plan discloses that “the Company” may amend the Plan. A company acts through its officers and agents — in this case Hy-Vee’s Board of Directors — not through independent Plan trustees. See Schoonejongen, — U.S. at -, 115 S.Ct. at 1229. Moreover, the Plan’s separate Trust Agreement provides that the trustees must pay benefits according to the “Plan Document,” which in turn is defined as the schedule of benefits “as may from time to time be amended.” Thus, the trustees have no role in amending the Plan, and their duties are not substantially changed by amendments to the Plan’s schedule of benefits. The district court correctly dismissed the Ravenscrafts’ ERISA disclosure claim.

2. The Ravenscrafts next argue that Hy-Vee abused its discretion by amending the Plan to terminate coverage for IVF treatments. ERISA does not provide a right to benefits under an employee welfare benefit plan, and an employer does not act as an ERISA fiduciary in adopting or amending that type of plan. Schoonejongen, — U.S. at -, 115 S.Ct. at 1228. Thus, absent a contrary contractual commitment, “[a]n employer may unilaterally modify or terminate health benefits.” John Morrell & Co. v. United Food & Commercial Workers Int’l Union, 37 F.3d 1302, 1303-04 (8th Cir.1994), cert. denied, — U.S. -, 115 S.Ct. 2251, 132 L.Ed.2d 259 (1995). Here, Hy-Vee retained complete discretion to amend the Plan. Its decision to amend the Plan to eliminate the benefits in question is not subject to judicial review for abuse of discretion.

3. The Ravenscrafts next argue that defendants were arbitrary and capricious in applying the January 1993 Plan amendment to deny their claim for continuing IVF benefits. That broad issue was presented in counsel’s demand letter to the Plan Director — he asserted that the Benefit Coordinator obligated the Plan to provide those benefits for as long as the Ravenscrafts continued IVF treatments when the Benefit Coordinator wrote to inform Martha that IVF treatments were covered. Defendants denied this claim, explaining that each IVF treatment cycle is a separate medical procedure and therefore the amendment precludes coverage for IVF cycles that begin after its effective date.

In their summary judgment memorandum to the district court, however, the Ravens-crafts argued a more limited and factually different theory. They submitted an affidavit that Martha had begun a third cycle of TVF treatments in November 1992 and would have continued that cycle in January 1993 had the Plan amendment not caused her to cancel. Pointing to defendants’ interrogatory answer admitting that “if a member was in a treatment cycle prior to a change in plan coverage, said member would be allowed to complete that particular treatment cycle,” and to a Trust Agreement provision that no amendment to that Agreement may result in a reduction of benefits payable on account of a pre-existing “sickness,” the Ravenscrafts now argued that defendants were arbitrary and capricious in invoking the amendment to terminate coverage of their on-going third IVF treatment cycle.

There is certainly support for this theory in the ERISA case law. See Lutheran Med. Ctr. v. Contractors Health Plan, 25 F.3d 616, 621-22 (8th Cir.1994) (an “unreasonable inconsistency” in paying health benefits is evidence of arbitrary and capricious action). The problem is that it was never presented to the Plan administrators; it grew out of discovery and the summary judgment process in the district court. In support of their motion for summary judgment, defendants submitted an affidavit by the Plan Director averring that she first learned of Martha Ravenseraft’s claim of a third IVF treatment cycle in Martha’s summary judgment affidavit. This averral was supported by other evidence — Hy-Vee’s business record of the December 21,1992, telephone complaint from Jeff Ravenscraft, which noted that Martha’s next cycle would begin January 8, 1993; counsel’s January 12, 1993, demand letter, which made no mention that Martha had begun another treatment cycle in late 1992; and information obtained from the University of Iowa confirming that Martha had completed a treatment cycle in August and cancelled another that had been scheduled for January 1993. Although the Ravenscrafts countered that Plan officials should have known that Martha was in the middle of a new IVF treatment cycle when the amendment took effect, the district court concluded that “the record supports a finding that defendants’ belief that [Martha] was between [IVF] treatments was not arbitrary.” In reviewing that conclusion de novo, as we must, it is essential to identify the applicable ERISA summary judgment standard.

ERISA permits a plan beneficiary to sue “to recover benefits due to him under the terms of the plan or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). The first issue in considering such a claim is whether the appropriate standard of judicial review is de novo or deferential, an issue that affects both the evidence admissible in the district court, and the legal standard to be applied by the trial and appellate courts. See Donatelli v. Home Ins. Co., 992 F.2d 763, 765 & n. 2 (8th Cir.1993). Here, the Ravenscrafts concede that the deferential standard applies; indeed, they frame the issue as being whether defendants acted in an arbitrary and capricious manner.

In conducting judicial review under the deferential standard, the reviewing court looks to the evidence before the Plan administrators when they denied the claim. See Oldenburger v. Central States, S.E. & S.W. Areas Teamster Pension Fund, 934 F.2d 171, 174 (8th Cir.1991). In their claim to the Plan, the Ravenscrafts demanded IVF benefits for as long as they might wish to continue those treatments, without disclosing the status of Martha’s treatment when the Plan amendment took effect. However, well into the summary judgment process, the Ravenserafts offered new evidence in support of the more modest theory that they were entitled to benefits for the uncompleted third IVF treatment cycle. This claim was never presented to the Plan administrators, and defendants responded with compelling evidence that the Plan administrators did not know Martha Ravenscraft had begun a third TVF cycle when the amendment took effect. The district court, applying the deferential standard of review urged by the Ravenscrafts, correctly concluded that the Plan administrators’ denial of the Ravenscrafts’ claim was not arbitrary and capricious as a matter of law. See Oldenburger, 934 F.2d at 174.

Before leaving this issue, we note a further complexity. “[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989). We find no Plan provision conferring discretionary authority to decide benefit claims. In other words, the Ravenscrafts erred in arguing this issue under the deferential standard of review. Moreover, under the de novo standard of review, a district court for good cause shown “may allow the parties to introduce evidence in addition to that presented to the fiduciary.” Donatelli, 992 F.2d at 765. However, the Ravenscrafts did not show cause for their eleventh-hour change of theory and new evidence, and they did not urge the district court to apply the principles of de novo review. In these circumstances, it was not plain error for the district court to apply the deferential standard of review and dismiss this claim.

4. Finally, the Ravenserafts argue that the Plan is estopped to terminate continuing IVF benefits in progress. However, estoppel principles are relevant in a beneficiary’s action to recover benefits under § 1132(a)(1)(B) only in the context of judicially reviewing the Plan fiduciary’s denial of benefits under the applicable rife novo or deferential standard of review. Estoppel may not otherwise be employed to vary the terms of an ERISA plan. See Houghton v. SIPCO, Inc., 38 F.3d 953, 958 (8th Cir.1994); Slice v. Sons of Norway, 34 F.3d 630, 632-33 (8th Cir.1994).

The judgment of the district court is affirmed.

      . The HONORABLE HAROLD D. VIETOR, United States District Judge for the Southern District of Iowa.

      . The claim and benefit provisions read like a typical insurance policy, which is not surprising since the Plan Administrator is an insurance company. Such provisions do not trigger the deferential ERISA standard of review. See Bounds v. Bell Atl. Enters. Flexible Long-Term Disability Plan, 32 F.3d 337, 339 (8th Cir.1994).


author: WOLLMAN, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Wayne Robert HAGGERTY, also known as Robert Wayne Haggarty, also known as Travis Cody, Appellant.
    No. 95-3684.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 12, 1996.
    Decided June 10, 1996.
    Rehearing and Suggestion for Rehearing En Banc Denied July 15, 1996.
    Patricia Carlson, Pierre, SD, argued, for appellant.
    David L. Zuercher, Asst, U.S. Atty., Pierre, SD, argued, for appellee.
    Before FAGG, JOHN R. GIBSON, and WOLLMAN, Circuit Judges.
   WOLLMAN, Circuit Judge.

Wayne Robert Haggerty appeals from the district court’s denial of his motion to dismiss the indictment charging him with illegal reentry into the United States after deportation subsequent to a prior aggravated felony, in violation of 8 U.S.C. §§ 1326(a) and 1326(b)(2). We affirm.

I.

On January 26, 1994, in the Municipal Court of California, County of San Diego, Haggerty, a Canadian citizen, was convicted of possession of methamphetamine, a violation of section 11377(a) of the California Health and Safety Code and section 17(b)(4) of the California Penal Code. He received a suspended sentence and was placed on probation for three years. On June 29, 1994, in the same court, Haggerty pled guilty to unauthorized possession of methamphetamine, a violation section 11377(a) of the California Health and Safety Code. He received a suspended imposition of sentence and was placed on probation for three years subject to various conditions, including serving 240 days in jail. Following these convictions, Haggerty was deported to Canada on November 17,1994.

On December 31, 1994, Haggerty reentered the United States without receiving permission for admission from the United States Attorney General. He was arrested in South Dakota, and his indictment charged:

That on or about the 31st day of December, 1994, in Todd County, in the District of South Dakota, Wayne Robert Haggerty a/k/a Robert Wayne Haggarty a/k/a Travis Cody, an alien, was found in the United States after having been arrested and deported from the United States on November 17, 1994, at Seattle, Washington, after having been convicted of a prior aggravated felony, to-wit, possession of a controlled substance (methamphetamine) on June 29, 1994, in Municipal Court of California, County of San Diego, and that prior to his reembarkation from a place outside the United States, Wayne Robert Haggerty a/k/a Robert Wayne Haggarty a/k/a Travis Cody had not received the consent of the Attorney General of the United States to reapply for admission and to enter the United States, in violation of 8 U.S.C. § 1326(a) and 1326(b)(2).

Haggerty filed a motion to dismiss the indictment, alleging that his prior conviction did not constitute an aggravated felony within the meaning of 8 U.S.C. § 1326(b)(2). Following a hearing, the magistrate judge issued a report and recommendation finding that the June 29, 1994, drug conviction constituted an aggravated felony and that the indictment was not fatally flawed for failing to allege the January 26, 1994, drug conviction. The district court adopted the magistrate judge’s report and denied the motion to dismiss the indictment.

Haggerty entered a conditional guilty plea, reserving his right to appeal the denial of his motion to dismiss the indictment. The district court sentenced Haggerty to sixty-six months in prison followed by two years’ supervised release.

II.

Haggerty contends that the indictment is invalid because it does not allege the January 26, 1994, California drug conviction. We hold, however, that because section 1326(b)(2) is an enhancement provision, the indictment did not need to charge a prior aggravated felony and thus was valid.

Section 1326 of Title 8 provides in relevant part:

Reentry of deported alien; criminal penalties for reentry of certain deported aliens
(a) Subject to subsection (b) of this section, any alien who—
(1) has been arrested and deported or excluded and deported, and thereafter
(2) enters, attempts to enter, or is at any time found in, the United States ...
shall be fined under Title 18, or imprisoned not more than 2 years, or both.
(b) Notwithstanding subsection (a) of this section, in the case of any alien described in such subsection—
(2) whose deportation was subsequent to a conviction for commission of an aggravated felony, such alien shall be fined under such Title, imprisoned not more than 20 years, or both.

8 U.S.C. § 1326.

Whether a prior conviction for an aggravated felony is an element of section 1326(b)(2) or is a condition triggering enhancement is a question of first impression in this circuit. Of the several other circuits that have addressed this issue, only one has held that the section constitutes a separate offense. Compare United States v. Campos-Martinez, 976 F.2d 589, 592 (9th Cir.1992) (separate offense) with United States v. DeLeon-Rodriguez, 70 F.3d 764, 767 (3rd Cir.1995) (enhancement provision), cert. denied, — U.S. -, 116 S.Ct. 1343, 134 L.Ed.2d 492 (1996); United States v. Palacios-Casquete, 55 F.3d 557, 559 (11th Cir.1995) (same), cert. denied, — U.S. -, 116 S.Ct. 927, 133 L.Ed.2d 855 (1996); United States v. Munoz-Cerna, 47 F.3d 207, 210 n. 6 (7th Cir.1995) (same); United States v. Cole, 32 F.3d 16, 18 (2d Cir.) (same), cert. denied, — U.S. -, 115 S.Ct. 497, 130 L.Ed.2d 407 (1994); United States v. Crawford, 18 F.3d 1173, 1177 (4th Cir.) (same), cert. denied, — U.S. -, 115 S.Ct. 171, 130 L.Ed.2d 107 (1994); United States v. Forbes, 16 F.3d 1294, 1297-1300 (1st Cir.1994) (same) and United States v. Vasquez-Olvera, 999 F.2d 943, 945 (5th Cir.1993) (same), cert. denied, — U.S. -, 114 S.Ct. 889, 127 L.Ed.2d 82 (1994).

Several of the courts of appeals that have addressed the issue have found that the plain language and structure of the statute lead to the conclusion that Congress intended it to be a sentence enhancement rather than a separate offense. See DeLeon-Rodriguez, 70 F.3d at 766; Cole, 32 F.3d at 18-19; Crawford, 18 F.3d at 1177; Vasquez-Olvera, 999 F.2d at 945-46. The First Circuit found the language and structure of the statute unhelpful in determining Congressional intent, but found that the section was an enhancement provision based on the policy against allowing prior prejudicial felonies to be introduced in front of a jury. Forbes, 16 F.3d at 1298-1300. The Ninth Circuit found the provision to be a separate offense based upon its analogy of the section to section 1325. Campos-Martinez, 976 F.2d at 591-92.

We agree with those circuits which have determined that section 1326(b) is a sentence enhancement. The plain language and structure of the statute indicate that it is a sentence enhancement. First, subsection (a) defines the crime of illegal reentry, and subsection (b) does no more than single out subsets of those persons reentering the country illegally for more severe punishment. See United States v. Ryan, 9 F.3d 660, 667-69 (8th Cir.1993) (finding 18 U.S.C. § 844(i) to be enhancement provision), aff'd on reh’g on other grounds, 41 F.3d 361 (8th Cir.1994) (en banc), cert. denied, — U.S. -, 115 S.Ct. 1793, 131 L.Ed.2d 721 (1995); United States v. Rush, 840 F.2d 574, 577 (8th Cir.) (en banc) (finding Armed Career Criminal Act amendment to possession of firearm statute to be enhancement provision), cert. denied, 487 U.S. 1238, 108 S.Ct. 2908, 101 L.Ed.2d 940 (1988). Second, subsection (b) cannot stand on its own as a separate offense without reference to subsection (a), as it “clearly predicates punishment upon conviction of the underlying crime.” See Ryan, 9 F.3d at 668. Cf. Rush, 840 F.2d at 577 (amendment could stand on its own as separate offense).

We agree with the Fifth Circuit that subsection (b) contains many of the common indicia of sentence-enhancement provisions. See Vasquez-Olvera, 999 F.2d at 945. Subsection (b) contains explicit reference to conviction under subsection (a); the penalty provisions in subsection (b) are directly tied to the penalty in subsection (a); and the title of the section indicates that it is a sentencing provision. The fact that subsection (b) does not provide guidelines for the sentencing hearing is outweighed by the several factors indicating it is a sentence-enhancement provision. See id.; see also Ryan, 9 F.3d at 668 (discussing Fifth Circuit’s factors indicating enhancement provision set out in United States v. Davis, 801 F.2d 754, 755-56 (5th Cir.1986)); Rush, 840 F.2d at 577 (same).

Because subsection (b)(2) specifies an enhancement rather than a separate offense, the indictment did not need to charge Haggerty with an aggravated felony. See United States v. Hamell, 3 F.3d 1187, 1189 (8th Cir.1993) (enhancement need not be charged in indictment), cert. denied, — U.S. -, 114 S.Ct. 1121, 127 L.Ed.2d 430 (1994). Thus, we need not address whether the indictment sufficiently charged Haggerty with an aggravated felony by charging the second, but not the first, conviction for drug possession.

III.

Haggerty contends that his prior conviction did not constitute an aggravated felony within the meaning of section 1326(b)(2). An “aggravated felony” is defined to include:

illicit trafficking in a controlled substance (as defined in section 802 of Title 21), including a drug trafficking crime (as defined in section 924(e) of Title 18); ... The term applies to an offense described in this paragraph whether in violation of Federal or State law....

8 U.S.C. § 1101(a)(43). Section 924(c)(2) of Title 18 in turn defines a drug trafficking crime as including “any felony punishable under the Controlled Substances Act (21 U.S.C. 801 et seq.).” Thus, Haggerty’s conviction is an aggravated felony if (1) it is punishable under the Controlled Substances Act, and (2) it is a felony. See Forbes, 16 F.3d at 1301. Haggerty concedes that his conviction is punishable under section 844(a) of the Controlled Substances Act, and we find that it is a felony under both federal and state law.

Under federal law, an offense is a felony if the maximum term authorized for the offense is “more than one year.” 18 U.S.C. § 3559(a). Possession of drugs is punishable as a felony under the Controlled Substances Act if the defendant has a prior federal or state drug conviction, as the defendant may be sentenced to “not more than two years.”’ 21 U.S.C. § 844(a).

A felony is defined under the Controlled Substances Act as “any Federal or State offense classified by applicable Federal or State Law as a felony.” 21 U.S.C. § 802(13). We find that Haggerty’s conviction is also a felony under California law. Possession of methamphetamine is punishable by imprisonment in the county jail not exceeding one year or by imprisonment in the state prison for a term of sixteen months, two years, or three years. Cal. Health & Safety Code § 11377(a) (West 1991); Cal.Penal Code § 18 (West 1988). An offense is a felony under California law if it is “punishable with death or by imprisonment in the state prison.” Cal.Penal Code § 17(a) (West 1988 & Supp. 1996).

Haggerty argues that because he received a suspended imposition of sentence following his second California conviction, he was convicted of a misdemeanor. Section 17(b) of the California Penal Code states, in relevant part, that when the court has discretion to punish a crime as a felony or a misdemeanor, it is a misdemeanor for all purposes:

(1) [ajfter a judgment imposing a punishment other than imprisonment in the state prison.
(3) [wjhen the court grants probation to a defendant without imposition of sentence and at the time of granting probation, on application of the defendant or probation officer thereafter, the court declares the offense to be a misdemeanor.

CaLPenal Code § 17(b) (West 1988 & Supp. 1996).

Haggerty does not meet either of the foregoing criteria. He does not meet the requirement of subsection (1) because “ ‘[a]n order granting probation is not a judgment.’” United States v. Robinson, 967 F.2d 287, 293 (9th Cir.1992) (quoting People v. Smith, 195 Cal.App.2d 735, 16 Cal.Rptr. 12, 13 (1961)). Haggerty does not meet the requirement of subsection (3) because the California court has never declared his conviction to be a misdemeanor. California courts considering the section have found that an offense that is punishable alternatively as a felony or a misdemeanor is regarded as a felony for every purpose until judgment. People v. Banks, 53 Cal.2d 370, 1 Cal.Rptr. 669, 677, 348 P.2d 102, 110 (1959); see also Robinson, 967 F.2d at 293. Accordingly, Haggerty’s June 29, 1994, conviction was a felony based on California law. We find no basis to support Haggerty’s contention that the California court must be permitted the opportunity to revoke his probation before he is charged with the federal crime.

Haggerty argues, finally, that in Taylor v. United States, 495 U.S. 575, 110 S.Ct. 2143, 109 L.Ed.2d 607 (1990), the Supreme Court determined that state laws are too arbitrary to be used as the basis for interpreting federal criminal statutes. Because Haggerty’s conviction would have also been a felony under federal law, however, his argument is meritless.

IV.

The conviction and sentence are affirmed.

      . The Honorable John B. Jones, United States District Judge for the District of South Dakota, adopting the report and recommendations of the Honorable Mark A. Moreno, United States Magistrate Judge for the District of South Dakota.

      . The Honorable Charles B. Kommann, United States District Judge for the District of South Dakota.