588 F.2d 140 (5th Cir. 1979), 77-3076, Southard v. Forbes, Inc.

Docket Nº77-3076.
Citation588 F.2d 140
Party NameJames H. SOUTHARD and Classic Car Investments, Inc., Plaintiffs-Appellants, v. FORBES, INC., Defendant-Appellee.
Case DateJanuary 17, 1979
CourtUnited States Courts of Appeals, Court of Appeals for the Fifth Circuit

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588 F.2d 140 (5th Cir. 1979)

James H. SOUTHARD and Classic Car Investments, Inc.,

Plaintiffs-Appellants,

v.

FORBES, INC., Defendant-Appellee.

No. 77-3076.

United States Court of Appeals, Fifth Circuit

January 17, 1979

Rehearing and Rehearing En Banc Denied Feb. 16, 1979.

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Joseph R. Manning, Glenn A. Delk, Atlanta, Ga., for plaintiffs-appellants.

Kirk M. McAlpin, Atlanta, Ga., Tennyson Schad, New York City, C. David Vaughan, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before BROWN, Chief Judge, TUTTLE and THORNBERRY, Circuit Judges.

TUTTLE, Circuit Judge:

James H. Southard, a dealer in antique automobiles and chairman of the board and principal stockholder of plaintiff Classic Car Investments, Inc. ("Classic"), brought this libel suit on the basis of an article about the plaintiffs' line of business in Forbes magazine, published by the defendant Forbes, Inc. ("Forbes"). The district court granted the defendant's motion for summary judgment, ruling that the article was not defamatory of the plaintiffs and was protected by the privilege of fair comment. We affirm.

In its July 15, 1974, issue Forbes published an article entitled "Degradation of a Hobby." The article was written by Alvin A. Butkus, a regular Forbes writer with ten

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years experience, as part of a series which the magazine publishes dealing with the investment aspects of "collectibles," items such as artwork that generally have interested collectors rather than investors.

The article discussed the growing field of investment in "classic," or antique, cars. It was clearly critical of speculators and promoters in this field, whom it called "the quick buck boys." The subheading of the article stated: "Want to be the first on your block to get burned in the latest speculative craze? Then get yourself an 'old' car." The gist of the article was to question the certainty of enormous appreciation in the value of old cars claimed by some of the promoters of the investment, and to warn would-be investors of some of the pitfalls of such investments.

The article included a chart, headed "Hottest Cars Around," illustrating some of the most dramatic instances of appreciation in value of old cars and including projections of future prices. A fine print footnote to the chart attributed as the source of the information it contained "Old Car Value Guides and Classic Car Investments." In fact, Classic did not furnish all of the future price estimates and the chart did not include the quality rating criteria used in the antique car industry to rate prices.

The final paragraph of the article discussed Southard:

How far can the craze go? Who can say? The Dutch tulip bulb mania in the 17th century was the prototype of such irrational booms. Some professionals are already licking their chops over prospects for the next round of higher prices. Jim Southard, a former Atlanta stockbroker turned auto collector-dealer, is readying investment programs in classic cars for profit-sharing and pension plans. His strategy is to sell such programs to groups of doctors, lawyers and corporations. They will get the appreciating value of the car and he will get a management fee and possibly even storage fees. "Investing in cars is just like buying stocks, except you don't have the downside risk," argues Southard. "You buy the highest quality, where demand is greatest and supply is small. The value of those cars never goes down, so you're guaranteed to make money." If he made claims like that for stocks, Southard would be in the soup. But there is no Securities & Exchange Commission for classic cars.

The quotations attributed to Southard in this paragraph were not verbatim quotes but a "distillation" of comments he made to reporter Butkus. Butkus' transcript and notes showed that Southard used similar, but less emphatic, language. 1

The day after this article appeared, the Securities and Exchange Commission, prompted by the article, began an informal inquiry to determine whether Southard and Classic were selling unregistered securities in violation of federal securities law. The inquiry led to no formal SEC action. 2

Southard and Classic filed suit for defamation against Forbes in the United States District Court for the Northern District of Georgia. They alleged that the article was libelous because it charged antique car dealers in general with unethical business practices, and Southard and Classic in particular with violations of federal securities law or with unethical business practices. Following substantial discovery, the district court granted the defendant's motion for summary judgment. The court ruled that as a matter of Georgia law nothing in the article was defamatory of either plaintiff, and that

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the misquotations of Southard were privileged under the doctrine of fair comment.

Both parties agree that Georgia law governs this case. Georgia law defines libel as a publication "tending to injure the reputation of any individual and expose him to public hatred, contempt, or ridicule . . . ." Ga.Code Ann. §§ 105-701, 703. 3 Although part of the definition of slander, a charge "made against another in reference to his trade, office, or profession" which is "calculated to injure him therein" also gives rise to a libel action. Ga.Code Ann. § 105-702. 4

A publication which on its face is necessarily within these statutory definitions is considered libelous per se. Holmes v. Clisby, 118 Ga. 820, 822, 45 S.E. 684 (1903) (predecessor statute). It is for the court, upon appropriate motion, initially to determine whether the publication at issue is defamatory as a matter of law. If as a matter of law the publication is not defamatory, the case must be dismissed. Garland v. State, 211 Ga. 44, 46, 84 S.E.2d 9 (1954). If the publication is defamatory per se, the jury is instructed accordingly. Weatherholt v. Howard, 143 Ga. 41, 42, 84 S.E. 119 (1915). If the publication has no necessarily defamatory meaning, but can be understood in more than one way, one of which is defamatory, then it is for the jury to decide if, on the basis of some innuendo resulting from the circumstances surrounding the publication, the publication in fact had that defamatory meaning. Holmes v. Clisby, supra, 118 Ga. at 822-23, 45 S.E. at 685-86; Sheley v. Southeastern Newspapers, Inc., 87 Ga.App. 167, 171, 73 S.E.2d 211 (1952) and cases cited therein.

These distinctions between libel per se and libel by innuendo do not affect the court's initial task of determining whether...

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