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Wednesday, May 29, 2024 | Back issues
Courthouse News Service Courthouse News Service

CBS Cleared on Coverage of ‘Dream Home’ Gamble

ST. LOUIS (CN) - A Minneapolis police officer had probable cause to arrest a man for running an illegal gambling operation, and CBS didn't defame the man with its coverage of the case, the 8th Circuit ruled.

In spring 2008, real estate developer Paul Stepnes designed an online contest in which people could vie for a chance to win a Minneapolis house that he built worth $1.8 million. Contestants entered the "Big Dream House Giveaway" by guessing the number of fasteners contained in a chest.

Though the house was actually in foreclosure after Stepnes failed to find a buyer, he advertised the contest as a charity with proceeds going to the Chester House Foundation. Stepnes described the foundation as an organization focused on providing affordable housing and reducing homelessness, and he did not reveal that he was its sole owner.

Shortly after the contest launched, a contractor told Minneapolis police that he believed Stepnes might be conducting an illegal raffle. Sgt. Peter Ritschel arrested Stepnes without a warrant then began an investigation into the contest.

In July, reporter Esme Murphy aired a story on Stepnes for CBS affiliate WCCO TV.

"The broadcast also included interviews of Sergeant Ritschel and a contestant," according to the federal appeals court. "It reported that Minneapolis police had said that Stepnes could be headed to jail, that the Chester House Foundation was not a registered charity in Minnesota, that the Irving Avenue house was in foreclosure, and that Stepnes believed his arrest was an ' abuse of police power.' The broadcast concluded by noting that the Minneapolis city attorney was continuing to investigate the situation."

In a subsequent lawsuit, Stepnes claimed that Minneapolis and Sgt. Ritschel had violated his Fourth Amendment rights. He also claimed CBS coverage was defamatory.

A federal judge threw out the case on summary judgment, and the 8th Circuit affirmed last week.

"The record here indicates that Sergeant Ritschel had at least arguable probable cause to arrest Stepnes for running an illegal lottery after receiving the contractor's call and investigating the contest website," Judge Diana Murphy wrote for the three-judge panel. "The website indicated that contestants had to pay $20 for a chance to win the house or smaller weekly prizes. While the website explained that guessing the number of fasteners in the chest was a 'contest of skill' because it involved using 'mathematical and analytical skills,' the website also advertised a weekly drawing for which no skill was involved and listed a winner of one of the weekly prizes, showing that this aspect of the contest was under way."

The allegations against CBS and its reporter, Murphy, failed as well.

"A public controversy existed at the time of Murphy's broadcast because Stepnes's contest and arrest had already been debated in the local press, and both of those issues had ramifications beyond the contest participants," Murphy wrote. "Stepnes also played a meaningful role in the controversy and had access to effective channels of communication to counteract allegedly defamatory statements: he sought publicity for his contests through engaging public relations personnel, he spoke to the local press following his arrest, and he granted Murphy an interview for her broadcast against the advice of his public relations personnel."

Judges Diana E. Murphy, Roger L. Wollman and Duane Benton made up the 8th Circuit's three-judge panel.

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