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OAH
8-0325-21219-CV |
STATE OF
OFFICE OF
ADMINISTRATIVE HEARINGS
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Wallace Fatland, Complainant, vs. Brian Smith and
Gary Larsen, Respondents. |
FINDINGS
OF FACT, CONCLUSIONS AND
ORDER |
The above-entitled matter came on for an
evidentiary hearing on May 27, 2010, before a panel of three Administrative Law
Judges: Eric L. Lipman (Presiding Judge),
Steve M. Mihalchick and William R. Johnson.
The hearing record closed at the conclusion of the hearing on May 27,
2010.
Wallace Fatland (Complainant) appeared on his own behalf without counsel. He was assisted by Linda Olson and David Green.
Frederic W. Knaak, Attorney at Law, appeared on behalf of Brian Smith and Gary Larsen (Respondents).
STATEMENT OF ISSUE
Did Respondents violate Minn. Stat. §
211B.06 by intentionally participating in the preparation or dissemination of
false campaign material that Respondents knew was false or communicated to
others with reckless disregard as to whether it was false?
The panel concludes that the
Complainant, Mr. Fatland, has not established by clear and convincing evidence
that Messrs. Smith and Larsen violated Minn. Stat. § 211B.06.
Based upon the entire record, the panel
makes the following:
FINDINGS
OF FACT
1.
Wallace
Fatland, Brian Smith, and Gary Larsen are all residents of
2.
Mr.
Fatland is an employee of the Township and active in the civic life of the
town.[2]
3.
Mr.
Smith and Mr. Larsen are local developers and have each served on the
Burlington Township Board. Currently,
Mr. Smith is an incumbent Township Supervisor.[3]
4.
In
early 2008, the members of the Township Board were Kathleen Froelich,
Supervisor and Chair; David Green, Supervisor; Everett Hoskins, Supervisor;
Linda Olson, Treasurer; and Angela Ewanika, Clerk.[4]
5.
At the
March 2008 annual meeting of Township electors, the Board reviewed the proposed
5-year Road Maintenance Plan. The plan consisted
of work on the following roads in the following budgeted amounts: Acorn Lake Road, $50,000; Eagle Lake Road, $200,000;
McHugh East, $30,000; Hidden Hills, $30,000; Valley View Road, $3,000; Lee
Lane, $20,000; and Erickson Circle, $3,000.[5]
6.
At this
same meeting, the Board voted to proceed with the
7.
In
September 2008, the Board certified the tax levy to fund the earlier-approved
8.
Messrs. Smith and Larsen oppose the
9.
In
March 2009, Everett Hoskins ran for re-election to the position of Burlington
Township Supervisor. He was defeated by
Brian Smith.[9]
10.
At the
March 2009 annual meeting, a motion was made by a Township elector to reverse
the action taken by the Township Board in 2008 approving the renovations to
11.
Following
the meeting, Supervisor Green consulted the Township’s attorney as to the effect
of the electors’ vote on the
12.
At the
May 14, 2009, Burlington Township monthly business meeting, Supervisor David Green
made a motion to award contracts for the Eagle Lake Road and Acorn Lake Road renovation
projects to Mark Sand & Gravel Company of Fergus Falls, MN. The proposed contracts totaled $261,631.83. Over the objection of Supervisor Brian Smith,
the motion was approved and the contracts awarded.[12] Also
at this meeting, Jennifer Beck replaced Angela Ewanika as Clerk.
13.
Chairperson
Froelich, Treasurer Olson, and Clerk Beck signed the contracts for the
14.
15.
On July
1, 2009, the Township received the first installment of the annual tax receipts
– a disbursement in the amount of $217,000.[15]
16.
At the
July 9, 2009, monthly business meeting of the Board, Supervisor Smith presented
quotations for road maintenance of
17.
At the
conclusion of the July meeting, Chairperson Froelich resigned from her position
on the Board.[17]
18.
Notwithstanding
the Township Board’s approval of road refurbishment projects, the Township
treasurer does not encumber amounts of the annual levy immediately following
actions by the Board. Instead, by
staging the receipt of contractor invoices and the start dates for various
construction projects, the Township has been able to maintain more than
$100,000 in its various accounts.[18]
19.
Shortly
after the July 2009 Township monthly business meeting, Brian Smith and Gary
Larsen reviewed the Township’s treasurer’s reports, meeting minutes, and bank
statements. Likewise, Mr. Smith made
inquiries of the Township’s depository bank as to the current balances and
various deposits with the bank. With
these materials, the duo developed a spreadsheet detailing the Township’s various
financial commitments. They concluded
that if the Township disbursed funds for each of the items as to which an
appropriation of money had been earlier-approved, and continued to incur its
regular operational expenses, the Township would not have sufficient funds to meet
its obligations. Moreover, they
projected that the Township would run out funds before receiving the second disbursement
of tax levy revenue in December of that year.[19]
20.
In a
letter to the editor published in the Frazee-Vergas
Forum on July 16, 2009, Gary Larsen wrote:
After August the
. . .
The component of taxes that would have been
used for gravel, dust control and early winter snow removal has been totally
consumed by the
21.
A July
29, 2009, article in the Becker County
Record detailed the controversy surrounding the
22.
In
response, the article quoted Supervisor Green as saying that the allegations of
fiscal mismanagement were “a bunch of B.S.” Green opined that Smith instigated this
controversy because the Township had earlier declined to designate as public
roads, roadways which led to Smith’s 16-unit development.[22]
23.
Township
Clerk Jennifer Beck was likewise quoted in the article to the effect that Township’s
finances “are in good shape.” According
to Clerk Beck, the Township’s bank balance on July 1, 2009, was approximately
$366,000. She explained that once the
Township paid the contractor on the
24.
In a
letter to the editor from the Township Treasurer, Linda Olson, published in the
Frazee-Vergas Forum on July 30, 2009,
Ms. Olson responded to the claim that the Township would be out of money after
August.[24] Ms.
Olson detailed the Township’s financial obligations and resources, and noted
that the Township had approximately $38,000 in a checking account as of June
26, 2009, and approximately $121,000 in a money market account. Treasurer Olson also defended the Board’s
decision to undertake the
25.
A
letter to the editor from Brian Smith also appeared in the Frazee-Vergas Forum on that day. Supervisor Smith defended the numbers in the
spreadsheet that he and Gary Larsen compiled and called the Township Board
“dysfunctional.” He encouraged township
residents to attend the next monthly business meeting on August 13, 2009.[26]
26.
At the beginning
of the August 13, 2009, monthly business meeting, Kathleen Froelich rescinded
her resignation as Township Board Chair.[27]
27.
A
28.
Between
June 2009 and December 2009, the
29.
The
January 2010
30.
At the
January 14, 2010 monthly business meeting, the Board approved a motion to pay
Mark’s Sand and Gravel $26,625.73 for work performed on the
31.
In
January 2010, Gary Larsen filed an affidavit of candidacy for the office of
Township Supervisor. Mr. Larsen sought
election to the office held by Mr. Green, who was seeking re-election to
another term.[32]
32.
Mr.
Larsen disseminated campaign material asserting that Chairperson Froelich and
Supervisor Green engaged in reckless spending by pushing through the
33.
Mr.
Larsen wrote a second letter to the editor that was published in the Frazee-Vergas Forum on February 25,
2010. In this letter he again asserted
that the Township would soon be out of funds.[34] In
that letter Mr. Larsen wrote:
Not only did I not ignore the [township]
treasurer’s report, but used the report to inform the public that we would be
out of funds as was finally admitted in August by the chairman when she
repeatedly told the residents that the township was out of money.[35]
Mr. Larsen closed the letter by encouraging
residents of the township to vote for him.
34.
In Supervisor
Smith’s letter to the editor, which was also published in the February 25,
2010, edition of the Frazee-Vergas Forum,
he stated that the road paving project supported by Supervisor Green and
Township Chairperson Kathleen Froelich “took all of the money” and that Ms.
Froelich repeatedly told residents in August that “the township had no money.”[36] Mr.
Smith asserted in his letter that “[t]his is not a rumor. It is a fact.” [37] Mr.
Smith closed his letter by encouraging residents to vote for Gary Larsen.
35.
In a
letter to the residents of
36.
Supervisor
Green defeated Gary Larsen in the March 9, 2010, election for Burlington
Township Supervisor.[39]
37.
Mr. Fatland
filed this complaint with the Office of Administrative Hearings on March 26,
2010.
38. Brian Smith and Gary Larsen assert that the
figures that they generated after the July 2009 Township monthly business
meeting were accurate when they were developed.
They assert that the balances shown on the Township’s monthly cash
control statements oversimplify the Township’s financial circumstances.[40]
Based upon the foregoing Findings of Fact,
the panel makes the following:
CONCLUSIONS
1. Minn. Stat. § 211B.35 authorizes the panel
of Administrative Law Judges to consider this matter.
2. Campaign material is defined to mean “any literature, publication, or material that is disseminated for the purpose of influencing voting at a primary or other election, …”[41] The letters to the editor and spreadsheet prepared by Brian Smith and Gary Larsen are campaign material within the meaning of that statute.
3.
Minn. Stat. § 211B.06, subd. 1, provides, in
part: “A person is guilty of a gross
misdemeanor who intentionally participates in the preparation, [or] dissemination
… of … campaign material with respect to the personal or political character or
acts of a candidate … that is designed or tends to elect, injure, promote, or
defeat a candidate for nomination or election to a public office …, that is
false, and that the person knows is false or communicates to others with
reckless disregard of whether it is false.”
4. The burden of proving the allegations in the complaint is on the Complainant. The standard of proof of a violation of Minn. Stat. § 211B.06, relating to false campaign material, is clear and convincing evidence.[42]
5. The Complainant has failed to demonstrate that the Respondents violated Minn. Stat. § 211B.06 because the evidence is insufficient to prove that the materials at issue are false and that Respondents knew it was false or subjectively knew that it was probably false.[43]
Based upon the record
herein, and for the reasons stated in the following Memorandum, the panel of
Administrative Law Judges makes the following:
ORDER
IT IS ORDERED: The Complaint is DISMISSED.
|
/s/ Eric L. Lipman |
|
ERIC L. LIPMAN |
|
Presiding Administrative Law Judge |
Dated: June 9, 2010
|
/s/ Steve M. Mihalchick |
|
STEVE M. MIHALCHICK |
|
Administrative Law Judge |
|
/s/ William R. Johnson |
|
WILLIAM R. JOHNSON |
|
Administrative Law Judge |
NOTICE
This is the final decision in this
case, as provided in Minn. Stat. § 211B.36, subd. 5. A party aggrieved by this decision may seek
judicial review as provided in
MEMORANDUM
Minnesota Statutes § 211B.06 prohibits the preparation and dissemination of false campaign material. The prohibition has two elements: (1) A person must intentionally participate in the preparation or dissemination of false campaign material; and (2) the person developing or disseminating the material must know that the item is false, or act with reckless disregard as to whether it is false.
As to the first element of the statute, the test is objective: The statute is directed against false statements of fact. The statute does not proscribe criticism of candidates that is merely unfair or uncharitable.[44] Indeed, this statute is set against the backdrop of the First Amendment, which assures Americans in the public square sufficient “breathing space” to assemble data, construct arguments and present conclusions to their fellow citizens.[45]
With respect to the second element of the statute – namely, Respondents’ awareness surrounding the claims they made regarding the Township’s financial outlook – the test is subjective: Mr. Fatland must prove by clear and convincing evidence that the Respondents “in fact entertained serious doubts” as to the truth of the publication or acted “with a high degree of awareness” of its probable falsity.[46] Otherwise, his claim for relief fails.
At its essence, the dispute between Mr.
Fatland and Messrs. Smith and Larsen is one over “cash-based accounting” versus
“accrual accounting.” Smith and Larsen
insist that once a project is approved by the Township Board, representations
of the Township’s finances should reflect earlier Board actions through
commensurate deductions to Board accounts.
Fatland responds that such statements mischaracterize the Township’s
fiscal health; as deductions to its accounts only follow from contractor
invoices that are actually received and paid by the Township Treasurer.
Because there is a good-faith dispute as to
which accounting method best portrays the Town’s finances, Smith and Larsen’s
conduct is protected speech and falls short of the conduct that is proscribed
by the statute.
The Minnesota Supreme Court’s opinion
in Kennedy v. Voss[47] is instructive. In that case, an incumbent
While the Justices of the Minnesota Supreme
Court might not have shared the challenger’s assessment of the incumbent’s
voting record, or agreed with his reasoning, the Court held that the challenger
was legally entitled to share his assessment with the wider electorate.
As Chief Justice Sheridan summarized:
In this case, [the challenger] used a fact,
respondent’s “no” vote on the county budget vote, to infer that respondent did
not support any of the individual items in that budget. Although the
inferences made by the [challenger] may be considered extreme and illogical,
they do not come within the purview of the statute. The public is
adequately protected from such extreme inferences by the campaign process
itself. For example, in this case, the [incumbent Commissioner]
distributed two flyer’s rebutting the [challenger’s] remarks. The voters
of
Likewise, Messrs. Smith and Larsen were
entitled to apply accrual accounting practices to official data and share their
conclusions with fellow voters. Because
nothing in the record shows that the Respondents’ calculations were demonstrably
false, and circulated with some awareness of that falsity, their critiques are
not items that the State may reach, regulate, outlaw or punish.
Whether or not Smith and Larsen’s accounting methods
best portray the fiscal outlook of the Township is a matter that is (and was) committed
to the judgment and sound discernment of the electors of
Mr. Fatland failed to establish by clear and convincing evidence that the campaign-related claims made by Messrs. Smith and Larsen in letters to the Frazee-Vergas Forum were false statements under the Fair Campaign Practices Act. The Complaint is therefore dismissed.
E. L. L., S. M. M., W. R. J.
[1] Testimony of Wallace Fatland, Brian Smith, and
Gary Larsen.
[2] Test. of W. Fatland; Exhibit 1 (Disbursement
Register). Mr. Fatland performs services
for
[3] Test. of B. Smith and G. Larsen.
[4] Ex. D.
[5] Ex.
D; Ex. 15, Addendum D; Test. of Linda Olson.
[6]
[7] Test.
of L. Olson.
[8] Ex.
H (Becker County Record article dated
July 29, 2009); Test. of B. Smith; Test. of G. Larsen.
[9] Test. of B. Smith.
[10] Ex.
15, Addendum C (letter from David Green to attorney Troy Gilchrist dated March
18, 2009).
[11] Ex.
15, Addendum C (letter from Troy Gilchrist to David Green dated March 18,
2009).
[12] Ex.
2.
[13] Ex.
3.
[14] Test. of L. Olson.
[15] Test. of L. Olson.
[16] Ex.
1 (July 9, 2009, Monthly Business Meeting Minutes).
[17]
[18] Ex.
16. See
also, Ex. I.
[19] Ex.
1; Test. of B. Smith; Test. of G. Larsen.
[20] Ex.
C (emphasis in original).
[21] Ex.
H.
[22]
[23]
[24] Ex.
C.
[25]
[26] Ex.
C.
[27] Ex. I.
[28] Ex.
16. See
also, Ex. I.
[29] Exs.
5-10.
[30] Ex.
G.
[31] Ex.
F.
[32] Test. of G. Larsen.
[33] Ex.
E.
[34] Ex.
A.
[35]
[36]
[37]
[38] Ex.
15, Addendum C.
[39]
Test. of G. Larsen.
[40] Test.
of B. Smith; Test. of G. Larsen.
[41] Minn.
Stat. § 211B.01, subd. 2.
[42] Minn.
Stat. § 211B.32, subd. 4.
[43] See,
Riley v. Jankowski, 713 N.W.2d 379 (Minn. App. 2006), rev. denied (
[44] Hawley v. Wallace, 137
[45] See, Boos v. Barry, 485 U.S. 312, 322
(1988), ("[I]n public debate our own citizens must tolerate insulting, and
even outrageous, speech in order to provide adequate ’breathing space’ to the
freedoms protected by the First Amendment”); compare also, State v. Machholz, 574 N.W.2d 415, 422 (Minn. 1998)
("Commenting on matters of public concern is a classic form of speech that
lies at the heart of the First Amendment, and speech in public arenas is at its
most protected on public sidewalks, a prototypical example of a traditional
public forum") (citing Schenck v.
Pro-Choice Network of Western N. Y., 519 U. S. 357, 377 (1997)).
[46] St. Amant v. Thompson, 390
[47] Kennedy v. Voss, 304 N.W.2d 299 (
[48]
[49]