Preferred Citation: Powe, Lucas A., Jr. The Fourth Estate and the Constitution: Freedom of the Press in America. Berkeley:  University of California Press,  c1991.

Chapter Four— Libel


Although New York Times v. Sullivan emphasized the need for speech to be "uninhibited, robust, and wide-open," no modern discussion could fail to note that the falsity flowing from that robust debate may lead to an impoverished discourse where truth never quite has a chance to catch up and some speakers are reluctant to engage. "Uninhibited" catches the underlying premise of New York Times , that debate is necessarily improved by the removal of inhibitions. In the ensuing years it has become apparent that not all inhibitions are bad and that the need for information about the workings of government is frustrated rather than assisted when falsehood enters the debate. Furthermore, would-be public officials understand that a press armed with a constitutional hunting license will view them as fair game and that they will be required to put up with any distortions about their records and their lives that might occur. To the extent that some good citizens are deterred from entering public service, the functioning of our democracy is harmed. Additionally, for those who do enter public service and suffer wrongful damage to their reputations, the rules impose real costs.

The tensions between press freedom, public debate, and reputation are reflected in the legal rules intended to protect those interests. That much was foreseeable. What the Court could not have foreseen was that it might have created the worst of all possible


worlds, where the rules designed to free the press from a chilling effect nevertheless do not keep it warm enough, while reputational interests, recognized by other rules, remain consistently frustrated. A quarter-century of litigation since New York Times has led to the ironic situation where the law of libel protects neither the press nor the individual. Libel has become a lose-lose proposition.

No one disputes that reputational interests suffer under New York Times . As we have seen, most plaintiffs sue because that is the only way they can make their claim that they were wronged by a story. What many plaintiffs want first and foremost is for a falsehood to be corrected. But at least two major factors prevent the truth from coming out. First, the press just doesn't admit error—and the operation of the rules reinforces the "we stand by our story" posture of the press. Second, it is easier for the press to win on issues of legal privilege than of truth (even when the story is 100 percent true), and that is necessarily the favored line of defense. Thus three-quarters of the cases filed never make it to trial, but are disposed of by the conclusion that the plaintiff cannot produce the requisite evidence to overcome some press privilege (typically the New York Times v. Sullivan privilege of publishing defamatory falsehoods as long as this is done without actual malice). In all these cases the plaintiff will lose regardless of how false the statements were, and there is nothing the plaintiff can do about it. Once the cases do go to trial, most plaintiffs will win a money judgment, and with it a ruling that the statements were false; but for the few who cannot overcome the privileges of the press (for example, by proving actual malice), the trial result will be a well-publicized loss, with no finding that the statements were nevertheless false. The message is clear. Whatever the popular view may be, truth and falsity have precious little to do with libel litigation.[24]

The few cases that reach a jury also bear witness to the proposition that reputation, at least in any sense that is commonly understood, has virtually nothing to do with libel litigation either. Elmer Gertz, a liberal Chicago lawyer, had his reputation go to juries twice. The organ of the John Birch Society had labeled him a Leninist and had charged him with an attempt to frame a police officer for a murder; the harm to his reputation among associates and in the community was valued first at $ 50,000 and then, on retrial, at $ 100,000. Maybe the doubling was caused by subse-


quent inflation, but why the conduct of American Opinion had become so outrageous between juries that it needed to be punished to the tune of $ 300,000 in punitive damages the second time around was never explained.[25]

Only five companies received a Dun and Bradstreet financial report erroneously stating that Greenmoss Builders had filed for bankruptcy. Each received a correction from Dun and Bradstreet eight days later, and none took any action on Greenmoss during that period; a classic example of no injury. But libel law presumes injury, and the jury presumed it at $ 50,000 and then tagged an extra $ 300,000 in punitives to make sure Dun and Bradstreet got the message.[26]

Penthouse 's story about a baton-twirling Miss Wyoming who levitated men by oral sex initially got Kimerli Jayne Pring, a real baton-twirling Miss Wyoming, a fancy $ 26.5 million ($ 25 million of it in punitives). But the trial judge, recognizing that the jury had gotten a bit carried away, showed the wisdom of Solomon by cutting the judgment in half. The Tenth Circuit Court of Appeals, with an identical recognition about the jury, plus the realization that no one could seriously take the story as applying to Pring (who denied all its particulars), showed the wisdom of the Constitution by taking the other half away.[27]

The Washington Post published a story on how William Tavoulareas, in fatherly fashion, had engaged in favoritism toward his son by setting him up and then sending Mobil business his way; the story was worse in its headline than its substance. The jury thought that reputational sting worth $ 250,000 and they added $ 1.8 million in punitives—just the amount, it so happens, that Tavoulareas testified he had spent in legal fees.[28]

Then there was Mary Alice Firestone, whose well-publicized society divorce trial was full of stories of adultery. Apparently upset that her son would know, she sued Time , which had erroneously stated that the ground, rather than the groundwork, for the divorce was adultery. She got $ 100,000 (in 1973 dollars) for the distress that caused her—although, in one of the greatest-ever moves in a libel trial, her attorneys specifically withdrew any claim of injury to her reputation.[29]

It does not warm newspapers up to learn that of these examples, only Gertz and Greenmoss got to keep their awards. Nor does it


help that the Iowa researchers found the average successful case for the plaintiff to be worth a piddling $ 20,000. Recently there seems to be a damages explosion in tort verdicts, with sympathetic plaintiffs being allowed to reach deeply into the pockets of corporate defendants. Newspapers know catastrophe can arrive with just one big hit. The entire industry is aware that a $ 9 million judgment against the Alton (Illinois) Evening Telegraph sent the paper to bankruptcy court (although a subsequent settlement allowed the 38,000-circulation paper to stay in business). Libel is special only in arousing more than a sneaking suspicion that the plaintiffs really weren't hurt that badly.[30]

The press may be partially to blame for the damages spiral. When Westmoreland sued CBS for $ 120 million, everyone in the legal community (and presumably the press) knew the number was picked out of a hat. But all news reports of the case bandied about the amount "$ 120 million" as if it had meaning. (In much the same way, the press idiotically notes that if a criminal defendant is "convicted on all counts" and given the maximum sentences, the defendant could be sentenced to [say] 98 years in jail, when anyone familiar with the system—as the press certainly is—knows that the sentences will be concurrent, and therefore with time off for good behavior the defendant will in fact serve a sentence of 14 months.) By always reporting the ridiculous amount asked , the press may well be influencing both future plaintiffs and current juries about what they ought to believe is reasonable. This type of self-fulfilling prophecy is one the press could easily do without.

There is, of course, William Shakespeare's fine insight that reputation is an individual's prized possession, worth more than mere money. Robert Post has brilliantly illuminated the dignity aspect of reputation, its nonfinancial basis, and how jurors are providing damages for the affront to the plaintiff's dignity interest—an interest that is not objectively quantifiable. Yet "incalculable" and "unmeasurable" need not be defined as astronomical. What is occurring is not the monetary repair of reputational harm, but rather punishment of a press by a community that finds it in great need of improved manners.[31]

Punitive damages—which by law are designed to punish defendants—exacerbate the problem. How a jury chooses the amount of punitives varies, but as Tavoulareas illustrates, at a minimum jurors


seem to use them to cover all plaintiff's expenses. Furthermore, once a jury finds actual malice, and therefore can award some damages, "an award of punitive damages is almost a foregone conclusion." Yet because punitive damages are to punish, they are largely unsupervised in normal tort litigation, although supposedly either the trial or appellate court should set them aside when they are so disproportionate as to raise the presumption that they were awarded out of passion or prejudice. In libel cases, there is the chance they may be awarded because the press is unpopular generally or because the story in question touched an unpopular subject. Although the First Amendment ought to foreclose either possibility, it does so only if judges will set aside the awards, as they typically do; but that area of guess is hardly the "breathing space" New York Times attempted to secure.[32]

In the vast majority of situations, it is impossible to punish the press—or aid reputation—because these cases will never get to a jury. But in the rare case that does, the plaintiff sometimes hits the jackpot (until an appellate court intervenes). The tort rules systematically undercompensate, or fail to compensate, virtually all defamation injuries and then wildly overcompensate a handful.

To what end? After all, the rationale for constitutionalizing libel and actively supervising juries is the need to protect the press from the chilling effect of substantial liability. Yet just as the libel rules do not provide for a means of truth to come out at trial and are out of whack in restoring reputational harm, so, too, they fail to reduce the chilling effect. One terse answer is that the only way to really reduce the chilling effect is to abolish the tort of defamation (that is, libel and slander). Then, being truly free, the press can be genuinely warm. Justices Black and Douglas took that position, but that seems eras ago, and too much has happened in the ensuing years. There is no way that the Court is going to declare the press immune from libel liability. But the fact that the Court will not go all the way does not mean that it cannot deal with the problems its own decisions, as implemented by the remainder of the legal system, have created.

While the problems that the libel rules pose for the press are complex, they ultimately can be subsumed under a single heading: money. Libel litigation, as we have already seen, allows attorneys for the media to make out like bandits. Newspapers can insure


against some of the costs of libel, but even though that is a necessary cost of doing business, it is expensive, and the coverage is not complete. As long as the press has to guard against the possibility of multimillion dollar verdicts, there will be a pretty cool breeze blowing. These verdicts may be rare, but they happen; and two reasons for their occurrence stand out: the uncoupling of damage awards from injuries (and the availability of punitive damages) and the nature of the trial.

My colleague David Anderson has persuasively demonstrated that the nature of the modern libel trial feeds the damage awards. It took time, however, for this insight to come forward; for a while, after it became clear that the Court was serious about New York Times , it was thought that plaintiffs would find the "actual malice" requirement to be an impassable hurdle. Although the hurdle has turned out not to be impassable, the actual-malice rule of New York Times does prevent many cases from coming to trial and offers a theoretically potent defense weapon for those that do. Furthermore, libel plaintiffs were traditionally informed that they faced a searching scrutiny of their reputation and a real likelihood of being bloodied even in a victory. But a wholly unanticipated aspect of the actual-malice rule was that it turned the libel trial away from what the defendant said about the plaintiff to a scrutiny of how the press put the story together, what reservations the reporters and editors may have had about parts of the story, and why they chose to say one thing rather than another. Furthermore, if confidential sources (a topic in Chapter 6) were used in preparation of the story, the rules may lead to a judicial order to disclose the source—or face a judicial statement to the jurors that they may conclude the source did not exist. Most tort litigation tries the defendant; libel used to be different, but the actual-malice rule brought libel into the mainstream of tort litigation in this respect. It is now the defendant's conduct, rather than the plaintiff's reputation, that is on trial.[33]

Proving actual malice requires evidence about the reporters' and editors' states of mind. Obviously self-serving statements by the reporters need not be the end of the inquiry. Thus, as previously mentioned, discovery in a libel case will be an extensive rummaging through the defendant's procedures and thoughts in putting together the allegedly libelous story. It usually will turn on inferences


drawn from circumstantial evidence, although inquiring into how the reporter thought may provide the needed links. The press attempted to block such an inquiry in a "60 Minutes" case. Herbert v. Lando involved extensive discovery, and eventually CBS had had enough. Producer Barry Lando answered most questions directed toward him during discovery, but drew the line at why he had pursued certain leads and not others and why he believed some interviewees were more honest than others. Nor would he discuss his conversations with Mike Wallace about the preparation of the program. All of this was rolled into a claim of editorial privilege: that a plaintiff could not inquire into the state of mind of the reporter. The Second Circuit Court of Appeals actually agreed with this argument.[34]

The Supreme Court, however, was less than impressed. If the plaintiff could not inquire into the defendant's state of mind, then the plaintiff could not acquire the requisite evidence to meet the New York Times standard. Yet when Herbert v. Lando came down, the press went nuts. It was "Orwellian." It would "almost literally put lawyers into editors' chairs." It imposed "an intolerable chilling effect." It made it "more hazardous to exercise [press] freedoms." Herbert v. Lando could have tempered discovery to better recognize First Amendment values, but its logic was that of New York Times . The tone of press complaints does look childish. Marc Franklin in the Stanford Law Review and Justice Brennan in a speech both noted the incredible overreaction of the press; indeed Brennan chided it for its "bitterness" and "acrimonious criticism," even though he had dissented in Herbert v. Lando . But the press may well have intuited what would subsequently be clearer. Too much damage is done to the First Amendment by trying press behavior to a jury.[35]

The dynamics of a trial focusing on the practices, care, motives, and views of the press—especially when, as is likely, the story is false—invites punishment of the press. Indeed, the jury especially will have every motivation to lash at the arrogant institution when the jury disapproves as well of the story covered. A good plaintiff's lawyer will be able to paint the dispute as a contest between good and evil, and the necessary evidence to prove actual malice leaves no doubt which side is evil. Inflaming jury passions against an arrogant and maybe unpopular press is not consistent with the First


Amendment. There has been a shift from juries being protective of the press two hundred years ago, when the colonial governments were unpopular, to juries not offering protection when it turns out that the press is unpopular.

The New York Times rule, when it results in a summary judgment, works in the press's favor and leaves the plaintiff's reputation where it found it. In an actual trial, the New York Times rule turns the tables by its focus on press behavior; this focus is likely to inflame juries and invite punishing the press. A noted attorney who represents plaintiffs in libel actions has observed that "the public believes that the media generally look at themselves as answerable to nobody, and the public wants the media to be answerable like any other institution." A newspaper ombudsman notes that the public can understand mistakes: "What they can't understand is the extremes to which many reporters and editors go to keep from saying 'We were wrong.'" When the jury is given the evidence to infer actual malice it acts on it, and thus Anderson observes that "it is not surprising that the average jury award in cases where actual malice is found exceeds $ 2,000,000."[36]

For Fred Schauer, the money is a cost of doing business. Schauer notes that some negligent reputational harm will inevitably be inflicted by the press as it serves its function of assisting in public debate. He then notes that if a pharmaceutical manufacturer accidentally puts a drug on the market that causes harm, the tort liability system will make it pay. Indeed the possibility of erroneous liability will likely cause some pharmaceutical companies to cut back on product development or to delay marketing a beneficial product. Why, Schauer asks, should the pharmaceutical company pay while the press escapes paying for the harms it inflicts?[37]

Schauer, who has written some of the best analysis of the chilling effect, wishes to pose the serious problem of how the laws reduce chill and at what costs. Besides noting that freedom of the press, but not of pharmaceutical companies, is enshrined in the First Amendment, one answer to his question is that the capitalist system gives the pharmaceutical company powerful incentives to engage in research and development and to market new products. Financial incentives for newspapers, especially monopoly ones, to take risks are hardly as compelling. Schauer counters that the press will take all the necessary risks because of its "good faith sense of mission"—


but for those, including many in the press, who are appropriately skeptical, a little empirical data on how good faith substitutes adequately for financial incentives would be appreciated.[38]

Beyond the matter of incentives or the lack of them, there are two further answers. One is that a negligently manufactured drug will typically harm a number of individuals, whereas a libel harms only one. The second, about which a considerable amount has already been said, is that the jury's determination of damages is likely to be higher for the reputational harm suffered by the libel plaintiff than the physical harm (including possibly death) suffered by the pharmaceutical plaintiff. There are few paralyzed libel plaintiffs.

To recapitulate, the operation of the New York Times rule has produced a strange landscape. Issues of truth and falsity rarely surface, and the vast majority of plaintiffs do not have their reputations cleared. For those few that get to a jury, however, trying the press can lead to a nice, albeit usually momentary, windfall. And finally, the possibility of having to pay out that windfall, coupled with the necessary legal fees to avoid doing so, keeps the chill right on the press even though appellate supervision generally cuts the verdicts to size. Libel law, having been wholly remade in the wake of New York Times , needs to be rethought again. It is not that the Court misunderstood what to balance; rather, it is that the balance it achieved systematically weakens all the values it attempts to protect.

Chapter Four— Libel

Preferred Citation: Powe, Lucas A., Jr. The Fourth Estate and the Constitution: Freedom of the Press in America. Berkeley:  University of California Press,  c1991.