521 F. App'x 297
4th Cir.2013Background
- MyGallons announced a nationwide prepaid gas program June 30, 2008 using Voyager’s network; USB had not yet agreed to a program with MyGallons.
- USB issued desk statements denying affiliation, causing media backlash and damaging MyGallons’ prospects with processors.
- MyGallons sued USB for defamation, breach of contract, promissory estoppel, and tortious interference; jury awarded $4 million for defamation.
- District court denied USB’s Daubert motion to exclude expert testimony and upheld liability on defamation and other claims.
- Jury found for USB on Zenacon/MyGallons’ breach of contract claims; MyGallons received $4 million, later vacated on damages; remanded for new damages trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Defamation liability under Minnesota law | MyGallons; statements as a whole conveyed disassociation | USB’s true contract status defeats defamation | Sufficient evidence supported defamation liability |
| Sting from desk statements | Statements as a whole misrepresented relationship | Only truth of no contract mattered | Possible to find defamation from overall impression |
| Damages: general vs. special and excessiveness | $4M covers reputational and financial loss | Excessive for startup; improper special damages evidence | Damages vacated; remanded for new damages trial |
| Causation for lost-profits (special damages) | Defamation caused loss of alternative processors | Causation not proven; expert testimony flawed | Sufficient causation shown despite Daubert issues |
| Admissibility of expert testimony (Daubert) | Experts reliable; intended to quantify damages | Expert methodologies flawed; Daubert standard violated | District court abused discretion by admitting expert testimony |
Key Cases Cited
- McKee v. Laurion, 825 N.W.2d 725 (Minn. 2013) (defamation elements; truth vs substantial truth)
- Jadwin v. Minneapolis Star & Tribune Co., 390 N.W.2d 437 (Minn. Ct. App. 1986) (defamation; substantial truth standard)
- Longbehn v. Schoenrock, 727 N.W.2d 153 (Minn. Ct. App. 2007) (special damages, pecuniary loss requirement)
- Stuempges v. Parke, Davis & Co., 297 N.W.2d 252 (Minn. 1980) (special damages, causation standards)
- Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (U.S. 1993) (admissibility of scientific expert testimony)
- Scott Fetzer Co. v. Williamson, 101 F.3d 549 (8th Cir. 1996) (excessiveness of reputational damages in defamation)
- DeJarnette v. Corning, Inc., 133 F.3d 293 (4th Cir. 1998) (reasonableness of inference in causation)
- Lovelace v. Sherwin-Williams Co., 681 F.2d 230 (4th Cir. 1982) (causation in defamation damages)
- Imperial Developers, Inc. v. Seaboard S. Co., 518 N.W.2d 623 (Minn. Ct. App. 1994) (corporate defamation damages)