Sisler v. Gannett Co., Inc.

Decision Date21 October 1986
Citation104 N.J. 256,516 A.2d 1083
Parties, 55 USLW 2241, 13 Media L. Rep. 1577 Mayo S. SISLER, Plaintiff-Respondent and Cross-Appellant, and Apt-To-Acres, Inc., a New Jersey corporation, Plaintiff-Cross-Appellant, v. GANNETT CO., INC., a Delaware corporation, Defendant-Appellant and Cross- Respondent.
CourtNew Jersey Supreme Court

John B. McCrory, Rochester, N.Y., a member of the New York bar, for defendant-appellant and cross-respondent (Strauss & Hall, Princeton, attorneys, John B. McCrory, and Robert C. Bernius, Rochester, N.Y., a member of the New York bar, of counsel, Richard A. Ragsdale, Liberty Corner, on the brief).

Richard H. Thiele, Somerville, for plaintiff-respondent and cross-appellant (Thiele & Hermes, attorneys).

Thomas J. Cafferty, North Brunswick, for amicus curiae, New Jersey Press Ass'n (McGimpsey & Cafferty, attorneys).

The opinion of the Court was delivered by

HANDLER, J.

This libel suit calls upon us to consider what standard of liability should be established under New Jersey law with respect to tortious defamation committed by media defendants against a plaintiff who is not a "public figure" under the First Amendment. Both courts below held that ordinary negligence was the proper standard for determining whether such defamation was actionable. They were of the view that the plaintiff was essentially a "private person" who should not be required to bear the substantial, "actual malice" burden in order to prove defamation, as might otherwise be required under constitutional free-speech principles in situations where the defamed person can be considered a "public official" or "public figure." Defendants now renew their contention as to the appropriate standard for imposing liability, stressing that plaintiff involved himself in a matter of public concern and is not entitled to the diminished burden of proving defamation accorded truly private persons; in addition they claim error in two other trial court rulings. Plaintiff likewise brings before the Court several alleged trial errors regarding the amount of his damages.

I.

The facts in this case, as in most libel-defamation actions, are critical. In the early 1960's, plaintiff, Mayo Sisler, and several other Franklin businessmen co-founded the Franklin State Bank (FSB or bank). From the time of FSB's inception until 1980, plaintiff served as President or Chairman of the Board of the bank. During this period plaintiff also became involved in several substantial real estate and racehorse breeding projects. In 1980 Sisler retired from all official bank positions in order to pursue his other business interests, including the operation of a wholly-owned corporation, Apt-to-Acres, engaged in breeding standardbred and thoroughbred horses.

In August of 1981, The Courier-News, a newspaper with a circulation of 58,800 in central New Jersey, published a three article series concerning alleged improper loans made by the Franklin State Bank. The initial article, not at issue in this case, appeared on August 15, 1981, and reported that State and Federal authorities were investigating FSB for questionable loans issued on falsified credit reports. In the second article, which ran on August 19, 1981, defendant, Sam Meddis, a Courier-News staff writer, reported that a company with which plaintiff was associated had sold and leased land to the landlord of an auto company under investigation for falsifying credit reports in loan applications to FSB. While the facts related by this article were true, plaintiff objected to implications that arose from the newspaper's use of the word "ties" in the headline "Bank officials have ties with firm in loan probe," and to the newspaper's characterization of plaintiff's dealings with the auto company and its landlord as "private." The third article in the series, published on August 20, 1981, and again written by Meddis, accused plaintiff of receiving undercollateralized loans from Franklin State Bank to finance his horse farm, Apt-to-Acres. In fact, plaintiff had adequately secured his loans; Meddis had misinterpreted several public deeds and records. The Courier-News published retractions to the August 19th and August 20th articles on August 28, 1981 and September 18, 1981.

Fatefully, at the time the Courier-News published these articles plaintiff was negotiating with Louis Guida, a leading horse syndicator, to have three standardbred horses stand stud at Apt-to-Acres for the 1982 or 1983 breeding seasons. Two of the three horses, Seahawk Hanover and Computer, were described by a trial expert as among the top three stallions of the 1982 breeding season, while the third, Niatross, had lowered the world record for the pacing mile and was described by a trial expert as the "Horse of the Century." In the midst of these negotiations someone anonymously mailed the three Courier-News articles to Guida. Guida thereafter informed plaintiff in a letter that although he did not personally credit the articles, he could not take a chance on their veracity and was thus terminating negotiations for standing the three horses at Apt-to-Acres.

Plaintiff, together with Apt-to-Acres, filed suit for defamation in Superior Court, against Sam Meddis, The Courier-News Co., and Gannett Company, Inc., the parent of the Courier-News, as defendants. Plaintiff requested general damages for loss of reputation and mental anguish, special damages arising out of the lost stud fees from the horses, and punitive damages. At trial, the court dismissed Apt-to-Acres as corporate plaintiff and Gannett Company as a defendant. The trial judge also determined that plaintiff was not a "public figure" in terms of applying the strict "actual malice" burden of proof first described in New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964); accordingly it instructed the jury to return a verdict for the plaintiff if it found the defendant had been negligent in publishing a defamatory article. Additionally, the trial court denied plaintiff's request to submit the issues of punitive damages and damages for mental anguish to the jury. The jury returned a verdict for the plaintiff of $1,050,000, $200,000 in general damages and $850,000 in special damages.

Defendants appealed the ruling that Sisler was a "private figure," the trial court's use of a negligence standard, the adequacy of the evidence of negligence and of injury to reputation, as well as plaintiff's "standing" to recover special damages sustained by Apt-to-Acres, his wholly owned corporation. Plaintiff cross-appealed several rulings of the trial court concerning the quantum of damages. The Appellate Division affirmed the trial court in all respects. 199 N.J.Super. 307, 489 A.2d 704 (1985). In affirming the use of the negligence standard, the Appellate Division reasoned that Lawrence v. Bauer, 89 N.J. 451, 446 A.2d 469, cert. denied, 459 U.S. 999, 103 S.Ct. 358, 74 L.Ed.2d 395 (1982), in which the Court found plaintiff to be a "public figure" under the First Amendment and thus subject to the "actual malice" burden, implied a lesser standard for non-public figures. The Appellate Division did not address most of plaintiff's cross-appeal on the merits, deeming the cross-appeal to be waived by plaintiff's request that the appellate court consider its cross-appeal only if a subsequent trial on the damages issue would not prejudice the initial jury award. 199 N.J.Super. at 329, 489 A.2d 704.

We granted defendants' petition for certification and plaintiff's cross-petition. 101 N.J. 289, 501 A.2d 951 (1985).

II.

This case presents another episode in the unhappy cohabitation of the tort of defamation, which is protective of an individual's reputation, with constitutional guarantees that serve to protect free speech and press. The tort of defamation and the constitutional and common-law ideals of free speech have long competed for control over the standards of liability for false defamatory speech.

For most of American history, state common law refereed this contest free of federal intervention. Generally, the states favored allowing defamation actions to go forward at the expense of the values embodied in constitutional free speech. The defamed citizen had only to prove a false publication that would subject him to hatred, contempt, or ridicule, and general damage to reputation would be presumed. With the exception of a few isolated absolute and qualified privileges for speech considered particularly worth protecting, most false publications resulted in defamation verdicts for plaintiffs. Any potential First Amendment or similar constitutional complications were discarded under the rationale that defamatory speech had no "value to society" and thus did not merit constitutional protection. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 369, 94 S.Ct. 2997, 3022, 41 L.Ed.2d 789, 822 (1974) (White, J., dissenting); Eaton, "The American Law of Defamation Through Gertz v. Robert Welch, Inc. and Beyond: An Analytical Primer," 61 Va.L.Rev. 1349, 1350-64 (1975).

In New York Times v. Sullivan, supra, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, the Supreme Court realigned the balance between the First Amendment and tortious defamation. Against the background of a "profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open," id. at 270, 84 S.Ct. at 721, 11 L.Ed.2d at 701, the Court declared that the First Amendment "prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with 'actual malice'--that is, with knowledge that it was false or with reckless disregard of whether it was false or not." Id. at 279, 280, 84 S.Ct. at 726, 11 L.Ed.2d at 706. The holding stemmed from the Court's belief that the press, acting under the spectre of libel law, often engaged in self-censorship,...

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