Bandido's, Inc. v. Journal Gazette Co., Inc.

Decision Date24 July 1991
Docket NumberNo. 57A03-9012-CV-00533,57A03-9012-CV-00533
Citation575 N.E.2d 324
Parties19 Media L. Rep. 1178, 19 Media L. Rep. 1479 BANDIDO'S, INC., Appellant (Plaintiff Below), v. JOURNAL GAZETTE COMPANY, INC., Fort Wayne Newspapers, Inc., and Richard G. Inskeep, Appellees (Defendants Below).
CourtIndiana Appellate Court
Opinion on Denial of Rehearing

Oct. 7, 1991.

Robert E. Connolly, Fort Wayne, for appellant.

John D. Walda, Barrett & McNagny, Fort Wayne, for appellees.

STATON, Judge.

Bandido's, Inc. (Bandidos) appeals the trial court grant of summary judgment in favor of the Journal Gazette Co., Inc., Fort Wayne Newspapers, Inc., and publisher Richard Inskeep (collectively, the Newspaper). Bandidos filed suit for compensatory and punitive damages alleging the Newspaper printed a libelous headline resulting in substantial business losses. Bandidos raises six issues on appeal, which can be consolidated and rephrased as whether the trial court improperly granted summary judgment.

Reversed and remanded.

Bandidos operates three Mexican-style restaurants in Fort Wayne and one in nearby Lima, Ohio. On September 13, 1988, the Fort Wayne-Allen County Board of Public Health (Board of Health) conducted an inspection of the Bandidos restaurant located in the Northcrest Shopping Center in Fort Wayne (Northcrest Bandidos). The inspection report noted several problems, including: "Evidence of flies, roaches and rodents noted. Advise exterminator to do a full clean out of premise [sic]. Rodent droppings noted only in restroom." Record, p. 576. This item was among the many problems that required attention within thirty days, while some violations merited immediate action. One week later, a pest prevention service conducted a full clean out of the restaurant.

Approximately two weeks later, on October 4, 1988, the Board of Health conducted a second inspection to gather information for a hearing to be held the following day on the revocation of the Northcrest Bandidos' food service permit. Although the inspector observed some health code violations in the follow-up inspection, she did not find evidence of insects or rodents. Following the hearing on October 5, the Board of Health closed the restaurant.

On October 6, 1988, after obtaining copies of both inspection reports, 1 the Newspaper ran a story captioned with the following headline:

HEALTH BOARD SHUTS DOORS OF BANDIDO'S

Investigators find rats, bugs, at north-side eatery

The story and its headline ran in the Newspaper's first edition, circulated in northwestern Ohio communities, including Lima, and in the final edition circulated in the Fort Wayne area. The story was not included in the second edition, published for Indiana counties surrounding Fort Wayne.

That same day, the president of Bandidos met with representatives of the Newspaper to demand an immediate and full headline retraction, claiming the headline was erroneous and misleading in several respects, including: only one of four Bandidos restaurants was closed; health inspectors did not find rats or evidence of rats at the Northcrest Bandidos; and closure was based upon the second report that did not reveal any infestation, instead of the earlier inspection of the restaurant. Rather than print a headline retraction, the Newspaper included the following paragraphs in its story the following day on the Northcrest Bandidos' reopening:

Because of an editing error, a headline--not the story--in some editions of Thursday's Journal-Gazette said inspectors had found rats and bugs at the restaurant.

No evidence of rats was found at the restaurant. The Journal-Gazette apologizes for the inaccuracy of the headline.

On October 18, 1988, Bandidos demanded a full and complete retraction in writing as defined by IND.CODE 34-4-15-1 (1988). 2 The Newspaper refused, and Bandidos filed suit on November 21, 1988. The trial court concluded that there existed no facts in the record to support a finding of actual malice in the minds or conduct of any Newspaper employee. Finding no genuine issue of material fact on the element of malice, the trial court found that the Newspaper was entitled to judgment as a matter of law.

When reviewing the grant of a motion for summary judgment, this court will stand in the shoes of the trial court and consider the same matters as does the trial court. Kolczynski v. Maxton Motors, Inc. (1989), Ind.App., 538 N.E.2d 275, 276, trans. denied. Summary judgment is appropriate only when the pleadings, depositions answers to interrogatories, and admissions on file, together with affidavits and testimony, if any, show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. We will review these materials in the light most favorable to the non-moving party. Bischoff Realty, Inc. v. Ledford (1990), Ind.App., 562 N.E.2d 1321, 1323. This standard is applicable to a libel case, i.e., the non-movant must show affirmatively that there is a genuine issue of fact to resolve with respect to one of the elements of libel. Cochran v. Indianapolis Newspapers, Inc. (1978), 175 Ind.App. 548, 372 N.E.2d 1211.

In Indiana, a "private individual" such as Bandidos may recover for defamatory statements published in a newspaper only upon a showing that the statement was published with "actual malice." The Indiana standard for actual malice is the culmination of a number of United States Supreme Court cases beginning with New York Times Co. v. Sullivan (1964), 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, where the Court first enunciated the qualified privilege for media expression in the context of first amendment doctrine, requiring a "public official" to prove that a defamatory statement was made with actual malice in order to recover damages. Curtis Publishing Co. v. Butts (1967), 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094, extended this protection to media comments on matters of public interest concerning "public figures." The Court in Rosenbloom v. Metromedia, Inc. (1971), 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 increased the degree of first amendment protection by shifting the focus of the privilege from the person's status to the newsworthiness of the published statement. Finally, in Gertz v. Robert Welch, Inc. (1974), 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789, the Supreme Court found that the actual malice standard is applicable only to "public figures" and not to private individuals involved in newsworthy matters. However, under Gertz, the states are given the option to define their own standard of constitutional privilege, as long as the standard does not provide for liability without fault.

Concluding that "constitutional protection for speech and press was not intended to be limited to matters bearing only on issues of official conduct or the activities of pre-ordained or de-facto 'public figures'[,]" this court adopted the New York Times standard of actual malice. Aafco Heating & Air Conditioning Co. v. Northwest Publications, Inc., (1974), 162 Ind.App. 671, 680, 321 N.E.2d 580, 586, cert. denied (1975), 424 U.S. 913, 96 S.Ct. 1112, 47 L.Ed.2d 318. The standard adopted in Aafco "requires the private individual who brings a libel action involving an event of general or public interest to prove that the defamatory falsehood was published with knowledge of its falsity or with reckless disregard of whether it was false." Id.

In considering the type of conduct amounting to a reckless disregard for a statement's falsity, the United States Supreme Court determined that:

reckless conduct is not measured by whether a reasonably prudent man would have published, or would have investigated before publishing. There must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.

* * * * * *

Professions of good faith will be unlikely to prove persuasive, for example, where a story is fabricated by the defendant, is the product of his imagination, or is based wholly on an unverified anonymous telephone call. Nor will they be likely to prevail when the publisher's allegations are so inherently improbable that only a reckless man would have put them in circulation. Likewise, recklessness may be found where there are obvious reasons to doubt the veracity of the informant or the accuracy of his reports.

St. Amant v. Thompson (1968), 390 U.S. 727, 731-32, 88 S.Ct. 1323, 1325-26, 20 L.Ed.2d 262. Reckless disregard is also established by "an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers." Curtis Publishing, supra, 388 U.S. at 155, 87 S.Ct. at 1991.

The St. Amant Court made clear, however, that the defendant in a defamation action cannot automatically insure a favorable verdict by testifying that he published with a belief that the statements were true. "The finder of fact must determine whether the publication was indeed made in good faith." 390 U.S. at 732, 88 S.Ct. at 1326 (emphasis added).

The Newspaper asserts that Bandidos' failure to prove actual malice with convincing clarity demands summary judgment. Appellee's Brief, p. 11. This contention is without merit because it addresses Bandidos' evidentiary burden at trial. To ask the trial court to find that the plaintiffs have been unable to prove their case is to request the court to weigh evidence. This is not the function of a trial court on a motion for summary judgment. See Chester v. Indianapolis Newspapers, Inc. (1990), Ind.App., 553 N.E.2d 137, trans. denied. In Chester, our court of appeals was first presented with the opportunity to determine whether to apply the standard set forth in Anderson v. Liberty Lobby, Inc. (1986), 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202, to a libel case in Indiana. The United States Supreme Court in Liberty Lobby held:

where the factual dispute concerns actual malice, clearly a material issue in a New York Times...

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