Steaks Unlimited, Inc. v. Deaner

• Decision Date: 04 June 1980
• Docket Number: No. 79-1716,WTAE-TV4 and H,79-1716
• Citation: 623 F.2d 264
• Parties: 6 Media L. Rep. 1129 STEAKS UNLIMITED, INC., Appellant, v. Donna DEANER andearst Corporation, Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 264

623 F.2d 264

6 Media L. Rep. 1129

STEAKS UNLIMITED, INC., Appellant, v. Donna DEANER and WTAE-TV4 and Hearst Corporation, Appellees.

No. 79-1716.

United States Court of Appeals, Third Circuit.

Argued Dec. 10, 1979.

Decided April 24, 1980.

As Amended June 4, 1980.

Stuart K. Miller (argued), Robert N. Gluck, Gluck & Miller Law Offices, Wooster, Ohio, for appellant.

John P. McComb, Jr. (argued), Thomas E. Boyle, Moorhead & Knox, Pittsburgh, Pa., for appellees.

Before ADAMS, ROSENN and SLOVITER, Circuit Judges.

OPINION OF THE COURT

ADAMS, Circuit Judge.

This appeal from a summary judgment in favor of the defendants in this diversity action presents a series of important questions dealing with the law of defamation. The initial substantive inquiry is whether, under Pennsylvania law, the plaintiff, a retail meat company, has sufficiently supported its allegations that it was defamed in order to survive a motion for summary judgment. Second, we must decide the more difficult constitutional question whether the plaintiff, for purposes of this litigation, is a public figure as a result of its intensive advertising and sales campaign. A correlative issue is whether the district court erred in concluding that the plaintiff could not prove that the defendants entertained subjective serious doubts about the truthfulness of their broadcast allegations regarding the plaintiff. Finally, we must review the district court's ruling under the Pennsylvania shield law denying the plaintiff's discovery request for certain filmed outtakes. ¹ We affirm.

I.

In August 1976, Steaks Unlimited, Inc., an Ohio-based corporation, held a four day sale of meat at several Zayre department stores in the area of Pittsburgh, Pennsylvania. The product was United States Department of Agriculture (USDA) inspected, ungraded, frozen, tenderized, boxed beef, approximately equivalent to USDA commercial grade. ² To promote its sales, Steaks engaged in a widespread advertising campaign that included radio and newspaper advertisements, large signs erected at sales locations, and the distribution of handbills to persons walking near the Zayre store. The total cost of the campaign exceeded $16,000.00.

Donna Deaner, a reporter and consumer affairs editor for WTAE-TV in Pittsburgh, began investigating Steaks' advertising and sales operations. In an affidavit, Deaner stated that her interest was aroused when she read one of Steaks' advertisements in the August 19th edition of the Pittsburgh Press. She averred that she considered the advertisement contrary to normal sales practices because it did not disclose the USDA grade or the price per pound of the beef. Deaner also said that, from August 19 through August 23, she received telephone complaints from a number of Steaks' patrons regarding the quality of the beef and the company's sales practices. According to Deaner, the calls reinforced her initial suspicions that Steaks was engaging in deceptive sales tactics and persuaded her that further investigation was warranted.

On August 23, Deaner and her assistant, Ruth Lando, telephoned Ann Fox, administrator of the Allegheny County Bureau of Consumer Affairs, to determine whether the agency had investigated Steaks. Fox told them that she believed Steaks' advertisement in the Pittsburgh Press might be misleading, deceptive, and in violation of state laws. Citing a lack of resources, however, Fox stated that the agency was unable to conduct its own investigation and suggested that WTAE-TV look into the matter.

Later that day, Deaner and Lando visited Murphy's Meats, which is in the same shopping center in which Steaks was conducting its sale. In her affidavit, Deaner related that she asked Tom Ernette, an employee of Murphy's Meats from whom she had obtained reliable information in the past, if he was familiar with the sale. According to Deaner, Ernette replied that he had purchased a box of T-bone steaks from the sale and that, in his opinion, the beef was of "very poor quality," possibly the equivalent of utility, canner, or cutter grades of meat inferior to commercial grade. Deaner and Lando then walked over to Steaks' sale. Lando entered the Zayre store where she observed Aubrey Mills, a Steaks' sales agent, talking to customers. In an affidavit, Lando stated that in her opinion Mills was misrepresenting both the price and the quality of the beef. According to Lando, Mills stated that the price per pound was about one dollar, although in fact it was closer to two dollars, and announced that the beef was equivalent to beef sold in Pittsburgh supermarkets, which in Lando's view was an incorrect statement. Lando left the store and returned with Deaner, who listened to Mills and also concluded that he was misleading the customers. The two reporters then summoned a film crew.

Upon the crew's arrival, Deaner conducted a filmed interview with Mills in which Mills made what Deaner and Lando again believed were inaccurate and misleading statements about the price and quality of the beef. Deaner also interviewed several other persons whose identities have not yet been disclosed.

After returning to the newsroom, Deaner telephoned Stanley Berkovitz, Zayre's director of consumer affairs. According to Deaner, Berkovitz told her that Steaks merely leased space from Zayre and that he knew little else about the company. Deaner proceeded to inform Berkovitz of what she knew about Steaks, and he said that he would talk to a few people and call her back. Shortly thereafter, Berkovitz telephoned to say that his company's contract with Steaks called for the latter to sell commercial quality beef at prices lower than those set by local supermarkets. Berkovitz also stated that, as a result of Deaner's revelations, Zayre was going to terminate its association with Steaks.

Deaner then set about drafting and editing the script and film for broadcast on that night's 6:00 p. m. news program. In this endeavor, she was supervised by William Church, the station's assistant news director. Church recited in an affidavit that, after talking with Deaner, reading her script, viewing the film, and in light of Deaner's "outstanding reputation for truthfulness and accuracy," he concluded that the material chosen for broadcast was "truthful and accurate."

John Conomikes, the vice-president and general manager of WTAE-TV, stated in his affidavit that he had received a telephone call on the afternoon of August 23 regarding Deaner's investigation of Steaks from a person identifying himself as Darl Harkleroad, Steaks' president. According to Conomikes, he told Harkleroad that he would check the veracity of the story before it was broadcast. Conomikes then claimed that he called Church and Deaner who each convinced him that the broadcast would be truthful and accurate.

Late that same afternoon, according to Deaner, Harkleroad telephoned the newsroom. Deaner claims that she returned his call shortly before airtime and asked whether his company's product was in fact commercial grade beef. Deaner recalls Harkleroad responding that, although the beef was ungraded, it came from "mature, grass-fed" cattle and was the equivalent of USDA grade beef. Steaks denies that this conversation took place.

Deaner's report was broadcast that night. Paul Long, the program's anchorman, introduced Deaner with the comment that she had "a warning . . . for those looking for bargains at a big steak sale." Deaner first recounted her initial suspicion about Steaks, commenting that the company's advertisements did not mention the USDA grade of the beef and that "the price per pound was mysteriously missing from the ad." The report then cut to a film clip of Deaner's interview with Mills in which he is quoted as saying that Steaks' T-bones were "lovely, fully dressed and trimmed," and a "fantastic bargain at $21.75 per pack." When asked the price per pound, however, Mills replied, "per pound the prices vary." Deaner then charged, "(t)he truth of the matter is they do everything possible to avoid telling you the price per pound, . . . because when you take the time to figure it out and compare prices, you'll find that the meat being sold here isn't that much cheaper than the meats being sold in local supermarkets or meat markets." Deaner also declared that Mills' description of the beef as "fantastic" was a "total misrepresentation." She asserted that Steaks actually was selling commercial grade beef, which she stated came from "old tough animals" and was tenderized "with a variety of chemicals to make it palatable." The report quoted Mills representing that local supermarkets carry some ungraded beef. Deaner commented that this was "(a)nother misrepresentation" and that "very reputable supermarkets or meat markets in this area sell either choice or good quality beef. They would not even touch commercial quality meats." In conclusion, Deaner reported that "(t)oday, Zayre's officials learned about the quality of the meat and the deceptive sales tactics, and decided to thoroughly end their endorsement of this big steak sale." ³

Alleging that it was defamed by the broadcast, Steaks brought this action in the District Court for the Northern District of Ohio against Deaner, WTAE-TV, and the Hearst Corporation WTAE-TV's parent company. Federal jurisdiction was premised on diversity of citizenship. ⁴ On the defendants' motion for a change of venue, ⁵ the case was transferred to the District Court for the Western District of Pennsylvania. In its complaint, Steaks asserted that the broadcast was "false, scandalous, malicious, defamatory and libelous," and that the defendants aired it with a conscious disregard for the truth and with the intent to impeach the company's "honesty, integrity, and reputation." Steaks also alleged that, as a result of the broadcast, Zayre and another department store chain stopped doing business with it, and that it lost a number of potential customers as well. Steaks asked for $1.5...