Marcone v. Penthouse Intern., Ltd.

• Decision Date: 14 December 1983
• Docket Number: Civ. A. No. 78-3733.
• Citation: 577 F. Supp. 318
• Parties: Frank J. MARCONE v. PENTHOUSE INTERNATIONAL, LTD.
• Court: U.S. District Court — Eastern District of Pennsylvania

577 F. Supp. 318

Frank J. MARCONE v. PENTHOUSE INTERNATIONAL, LTD.

Civ. A. No. 78-3733.

United States District Court, E.D. Pennsylvania.

November 17, 1983.

On Motion for Reconsideration December 14, 1983.

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John A. Luchsinger, Media, Pa., for plaintiff.

Norman Ray Grutman, Jeffrey H. Daichman, New York City, Gregory S. Rubin, Philadelphia, Pa., for defendant.

MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

A jury has awarded compensatory damages of $30,000 and punitive damages of $537,500 to the plaintiff, Frank J. Marcone, and against the defendant, Penthouse International, Ltd., in this diversity defamation action. In an earlier opinion, 533 F.Supp. 353 (E.D.Pa.1982), this Court ruled that the plaintiff was not a public figure for the purposes of this action, and that the relevant Constitutional limitations on the Pennsylvania law of defamation were those imposed by Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). The Court also predicted that the Supreme Court of Pennsylvania would retreat from its holding in Matus v. Triangle Publications, Inc., 445 Pa. 384, 286 A.2d 357 (1971), cert. denied, 408 U.S. 930, 92 S.Ct. 2494, 33 L.Ed.2d 343 (1972) and allow a private figure defamation plaintiff to establish liability under Pennsylvania law based upon a showing of negligence. See Bufalino v. Associated Press, 692 F.2d 266, 274 (2d Cir.1982), cert. denied, ___ U.S. ___, 103 S.Ct. 2463, 77 L.Ed.2d 1340 (1983).

The jury found that the plaintiff had been defamed by an article in the November, 1978 issue of the defendant's publication "Penthouse, The International Magazine for Men". The article, authored by Edward Rasen, who was named as a defendant but never served in this action, was entitled "The Stoning of America." The article discussed the distribution and sale of marijuana to American markets. Its basic thrust was that the typical new drug businessman is an attorney for whom there is no meaningful deterrent to drug trafficking because federal judges do not sentence attorney criminals to prison. The plaintiff was listed as an example of an "attorney criminal," who "contributed down payments of up to $25,000 on grass transactions." The article stated that "charges against him were dismissed because he cooperated with further investigations." The jury found that the plaintiff had proved by a preponderance of the evidence that the defamatory portions of the article were untrue, and were published by the defendant either with knowledge of their falsity or with reckless disregard as to whether they were true or false. The jury had been instructed that an award of punitive damages also required a finding that the defendant's conduct was outrageous. (Charge 37, 38).

The defendant has moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The primary grounds advanced in support of the motion are: (a) the Court erred in charging the jury that an award of punitive damages required that the plaintiff prove knowledge of falsity or reckless disregard for truth or falsity by a preponderance of the evidence, the correct burden of proof being "clear and convincing" evidence; (b) the plaintiff failed to provide sufficient evidence of knowledge of falsity or reckless disregard for the truth to support the jury's award of punitive damages; (c) the plaintiff failed to prove that the article was false; (d) the plaintiff failed to present competent evidence of special harm or other actual injury resulting from the libel; and (e) the amount of the punitive damages awarded was so excessive as to indicate passion and prejudice and was disproportionate to the award of compensatory damages. For the reasons which follow, the defendant's motion for judgment notwithstanding the verdict will be denied, and the motion for a new trial will be denied, conditioned upon the plaintiff's acceptance of a reduction of the punitive damage award to $200,000.

Motions for a new trial require the exercise of discretion by the Court whose "duty is essentially to see that there is no miscarriage of justice." 6A Moore's Federal Practice ¶ 59.085, at 59-160 (footnote omitted) (2d ed. 1974); Thomas v. E.J. Korvette, Inc., 476 F.2d 471, 474-75 (3d Cir.1973). The jury's verdict may be set aside only if manifest injustice will result if it were allowed to stand. The Court may not substitute its own judgment for that of the jury merely because the Court may have reached a different conclusion. To grant a motion for judgment n.o.v., the Court must find as a matter of law that the plaintiff failed to adduce sufficient facts to justify the verdict. Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205, 1210 (3d Cir.), cert. denied, 400 U.S. 826, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970). Such a motion "may be granted only when, without weighing the credibility of the evidence, there can be but one reasonable conclusion as to the proper judgment." 5A Moore's, supra, ¶ 50.072, at 50-77 (footnote omitted); Korvette, supra, at 474.

Douglas W. Randall, Inc. v. AFA Protective Systems, Inc., 516 F.Supp. 1122, 1124 (E.D.Pa.1981), aff'd 688 F.2d 820 (3d Cir. 1982). In the present case, the Court finds that the jury verdict is supported by the evidence and that the evidence is more than sufficient to meet the applicable Constitutionally-imposed standards. In addition, the Court does not believe that any trial errors exist which warrant the granting of a new trial and that no manifest injustice will result if the jury verdict is allowed to stand, so long as the amount of the punitive damages award is reduced to $200,000.

A. STANDARD OF PROOF OF ACTUAL MALICE

The most troublesome contention raised by the defendant is that the Court erred in giving the jury the following interrogatory with respect to punitive damages:

Do you find that the plaintiff proved by a preponderance of the evidence that the portions of the article which were defamatory of the plaintiff and untrue were published by the defendant either with knowledge of their falsity or with reckless disregard as to whether they were true or false?

The error, according to the defendant, was in charging that this finding must be made by a preponderance of the evidence rather than by clear and convincing evidence. The defendant contends that this error requires a new trial. To succeed in this contention the defendant must show that the standard of the Court's instruction was erroneous, and that the failure to instruct as to the correct standard requires a new trial. As set forth below, the Court does not believe that it instructed the jury improperly, although the question is not free from doubt. However, even if the standard of the Court's instruction were incorrect, the error would not require a new trial, since under Pennsylvania law and under the relevant holdings of the Supreme Court the findings required to satisfy Constitutional standards may be made by this Court. The Court finds that the plaintiff has demonstrated that the defendant published the material defamatory of him with knowledge of falsity or reckless disregard of its truth or falsity, and the Court finds that this has been proven by clear and convincing evidence as well as by a preponderance of the evidence. A proper Constitutional basis therefore exists for the jury's award of punitive damages in this case.

As the Third Circuit as stated "adjudication of a defamation case under Pennsylvania law involves two principal inquiries: (1) whether the defendants have harmed the plaintiff's reputation within the meaning of state law; and (2) if so, whether the First Amendment nevertheless precludes recovery." Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 270 (3d Cir.1980). If the plaintiff is a private figure, "the First Amendment forbids states to impose liability without fault, but otherwise permits them to `define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual.'" 623 F.2d at 272 (quoting Gertz v. Robert Welch, Inc., 418 U.S. 323, 347, 94 S.Ct. 2997, 3010, 41 L.Ed.2d 789 (1974)). As stated above, this Court has determined that Pennsylvania would allow a private figure to establish liability upon a showing of negligence, and this standard of liability is within the Constitutional requirements of Gertz.

Determination of damages in defamation actions, like determination of liability, follows the same two-step inquiry: the requirements of state law must be met, and the restrictions on the state law cause of action imposed by the Constitution must not be violated. Again, within the limitations imposed by Gertz a state is free to define the relevant standards of proof. Dixson v. Newsweek, Inc., 562 F.2d 626, 629 (10th Cir.1977); Pirre v. Printing Developments, Inc., 468 F.Supp. 1028, 1043 (S.D.N.Y.) aff'd mem. 614 F.2d 1290 (2d Cir.1379). In this diversity case governed by Pennsylvania law, the Court, as stated at trial, must "apply the Pennsylvania law as to punitive damages except insofar as the Pennsylvania law as to punitive damages may have been limited by the Gertz language." (N.T. 7.185).

The law in Pennsylvania is clear on the circumstances in which an award of punitive damages is permitted. "Punitive damages are damages, other than compensation, or nominal damages, awarded against a person to punish him for his outrageous conduct." Chambers v. Montgomery, 411 Pa. 339, 344, 192 A.2d 355, 358 (1963), quoting Restatement of Torts, § 908(1). See also, Focht v. Rabada, 217 Pa.Super. 35, 268 A.2d 157 (1970); Chuy v. Phila Eagles Football Club, 595 F.2d 1265 (3d Cir.1979); Thomas v. American Cystoscope Makers, Inc., 414 F.Supp. 255 (E.D.Pa.1976). "Punitive damages are awarded only for outrageous conduct, ... for acts done with a bad motive or with a reckless indifference to the interests of others." Chambers, s

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