Time, Inc. v. McLaney

• Decision Date: 11 February 1969
• Docket Number: No. 25585.,25585.
• Parties: TIME, INC., d/b/a Life, Appellant, v. Michael J. McLANEY, a/k/a Mike McLaney, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

406 F.2d 565 (1969)

TIME, INC., d/b/a Life, Appellant, v. Michael J. McLANEY, a/k/a Mike McLaney, Appellee.

No. 25585.

United States Court of Appeals Fifth Circuit.

January 3, 1969.

Rehearing Denied February 11, 1969.

Harold R. Medina, Jr., New York City, Wm. S. Frates, Miami, Fla., for appellant, Larry S. Stewart, Frates, Fay, Floyd & Pearson, Miami, Fla., V. Thomas Fryman, Jr., Cravath, Swaine & Moore, New York City, of counsel.

Robert Orseck, J. B. Spence, Ronald S. Golub, Miami, Fla., for appellee, Podhurst & Orseck, Spence, Payne & Mastington, Miami, Fla., of counsel.

Before JOHN R. BROWN, Chief Judge, TUTTLE, Circuit Judge, and FISHER, District Judge.

Rehearing En Banc Denied February 11, 1969.

TUTTLE, Circuit Judge:

We are here presented with an unusual appeal, since it has heretofore hardly ever fallen to the lot of this court to consider an appeal from the denial by the trial court of a motion for summary judgment. Prior to the adoption by the Congress of the 1958 Amendment to 28 U.S.C.A. § 1292, by adding Section (b), no appeal could be taken from such an order by the trial court because it was not a "final order." Now, however, this court has jurisdiction to entertain such an appeal when the provisions of Section (b) are complied with.¹

Here the trial court made the required certificate and this court, on December 7, 1967, entered its order granting the application provided for under Section 1292(b).

At the outset, it may be appropriate to sound a caveat with respect to the action taken by this court in granting the application for interlocutory appeal, lest every unsuccessful litigant in the trial court should consider this action as a precedent requiring or even suggesting the advisability of seeking such an interlocutory appeal upon the denial by the trial court of his motion for summary judgment. The subject matter of this litigation, involving, as it does, the very serious and timely question of how far the First Amendment guarantee of freedom of the press may still be impinged upon by actions for libel, places some cases in a somewhat different category. This follows when the trial court and this court jointly consider that the failure to dismiss a libel suit might necessitate long and expensive trial proceedings, which, if not really warranted, would themselves offend the principles enunciated in Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22, because of the chilling effect of such litigation.

In this suit, in which the plaintiff demands a recovery of one million dollars actual and five million dollars punitive damages, and in which the plaintiff established a substantial record by taking depositions from several alleged sources of information relied upon by the publisher of the offending article, this court concluded that it would be appropriate to grant the request for an interlocutory appeal. This is appropriate because the Supreme Court has heretofore resolved, at the appellate level, in a number of cases, the question whether facts alleged and proved in the trial court met the standard laid down by it as to what nature of public official or public action would withdraw from a complaining party protection of the libel laws of the state absent a showing of "actual malice," and has also decided as a matter of law whether proof actually made upon the trial met that standard. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, 95 A.L.R.2d 1412; Associated Press v. Walker, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (considered by the Supreme Court in connection with the cited case of Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094, and St. Amant v. Thompson, 390 U.S. 727, 88 S.Ct. 1323, 20 L.Ed.2d 262.²

We conclude, therefore, that there are before us two questions for consideration: (1) Do the constitutional guarantees of the First and Fourteenth Amendments deny recovery to the plaintiff in this case unless he can show that the appellant published statements about him with "actual malice"? (2) If so, does the record established by the plaintiff demonstrate that there is no issue of fact from which the jury could find "actual malice"?

In order to understand the basis for the plaintiff's claim of injury at the hands of the appellant, it is necessary to relate briefly the facts surrounding the publication of the article. We avoid repeating part of the factual recitation by dealing with the above two questions in reverse order.

The issue of Life Magazine for February 3, 1967, contained a fifteen-page article entitled "The Scandal in the Bahamas." The article was written by William Lambert and Richard Oulahan, but so far as this record is concerned the responsibility for its preparation falls on Lambert. The record discloses that Lambert was an associate editor of Life and a winner of the Pulitzer Prize for investigative reporting. He had started work on the article in the early fall of 1966. In connection with its preparation he called on the press officer of the Department of Justice, who referred him to a lawyer, Robert Peloquin, a member of the Organized Crime and Racketeering Section of the Department of Justice. During the course of this discussion, Peloquin told Lambert that gamblers who had formerly operated in Havana under the Batista regime had moved to the Bahamas. Included in the names mentioned by Peloquin was that of Mike McLaney. Peloquin stated that McLaney was "one of the Havana gamblers who had moved into the Bahamas at one time or another, and he was mentioned as having operated a casino at Cat Cay, and that was his sic — it was brushed over. It was relatively unimportant." Lambert made no notes of this conversation, and in the original writing of the article he made no mention of McLaney. However, he devoted a good deal of the article to discussing the influx of U. S. gangsters, paying particular attention to the activities of three men, Courtney, Ritter and Brudner, who were described as "three Lansky henchmen." Immediately preceding the paragraph that mentions the plaintiff the single time, is this language:

"Courtney, Ritter and Brudner are all fugitives from the United States justice under indictment for violating the federal anti-racketeering statute as well as gambling tax evasion and failure to buy the annual $50 gambling stamp (they once operated the nation\'s largest bookie network, inherited from the late Frank Erickson)."

Then there follows the paragraph which is the subject matter of the lawsuit:

"Whatever the Pindling government decides to do about these three gamblers, one of their colleagues has turned up in the midst of Pindling\'s party. He is Mike McLaney, who managed one of Havana\'s big casinoes in the days when Lansky was a top mobster in the Cuban capital. During the recent election campaign, McLaney showed up in the Out Islands, providing free airlifts for PLP candidates. The mob always tried to hedge its bets."

The thrust of the article was that with connivance of the officials, the Bahaman government was actually a puppet government controlled by the United Bahamian Party (UBP). It described Sir Stafford Sands as the principal power in UBP. It developed the thesis that Sands arranged for the development of Grand Bahama Island through the Grand Bahama Port Authority, Ltd., headed by Wallace Groves. According to the article gambling was introduced to boost tourism, and Lansky and his "mobsters" arrived with the acquiescence of Sands, Groves and the UBP.

The article then described the current election that ended January 10, 1967, by the election of Lynden Pindling, head of the predominantly Negro Progressive Liberal Party (PLP), as premier of the Bahamas and the rejection of Sands and the UBP. The article commented on the fact that in his campaign Pindling had made the presence of the gambling mob, notably Lansky's lieutenants, Courtney, Ritter and Brudner, his basis for attacking the existing government and its allies. The Life article described the Pindling campaign as an effort to rid the Bahamas of the Havana gambling group.

Lambert's article was practically completed at the time of the election on January 10th, at which time, either a day or two before the election, or a day or two following it, (the two participants to the conversation disagree as to the time) a public relations man named McCrary, from whom Lambert had obtained some earlier reports about conditions in the Bahamas, called, according to Lambert's deposition, or was called and responded, with the information that McLaney had lent helicopters to Out Island candidates (Lambert's testimony identified these as candidates for the PLP party). McCrary also testified that in a telephone conversation, a man named Joe Abrell, told him that a man named Probinski had introduced the new Prime Minister Pindling to McLaney. In his testimony McCrary emphasized: "All of this was hearsay and during this period it was my purpose to run down rumors." He also testified that he reported to Lambert that he had heard a rumored story around town that McLaney had introduced Lansky to Groves and another that McLaney introduced Lansky to Sands.³

Lambert testified that upon receiving the report from McCrary that McLaney was assisting in the Pindling campaign, he recalled having previously heard McLaney's name as a Havana gambling operator and he searched the Life Morgue and checked information to ascertain whether this would disclose any connection between McLaney and other gamblers. Having found several articles that identified McLaney as being active in Havana gambling at the time Lansky was described as practically the partner of Batista in controlling gambling, he thereupon undertook to check with the Department of Justice again. He telephoned Mr. Peloquin and found that he was away from his office on naval training. He got the call through to him at a distant point where he asked him, "McLaney has come into...