633 F.2d 583 (1st Cir. 1980), 80-1172, Bruno & Stillman, Inc. v. Globe Newspaper Co.

Docket Nº:80-1172, 80-1173.
Citation:633 F.2d 583
Party Name:BRUNO & STILLMAN, INC., Plaintiff, v. GLOBE NEWSPAPER CO., Defendant.
Case Date:October 17, 1980
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 583

633 F.2d 583 (1st Cir. 1980)

BRUNO & STILLMAN, INC., Plaintiff,

v.

GLOBE NEWSPAPER CO., Defendant.

Nos. 80-1172, 80-1173.

United States Court of Appeals, First Circuit

October 17, 1980

Argued June 2, 1980.

Page 584

James F. McHugh, Boston, Mass., with whom Bingham, Dana & Gould, Boston, Mass., was on brief, for The Globe Newspaper Co.

Robert S. Potters, Boston, Mass., with whom Grover Henry Nix, III, and Nix & Wendell, Boston, Mass., was on brief, for Bruno & Stillman, Inc.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, MAZZONE, District Judge. [*]

COFFIN, Chief Judge.

These are cross appeals arising out of the actions of the district court in dismissing a negligence count in plaintiff's libel complaint against defendant newspaper and in granting plaintiff's motion to compel the disclosure of three of defendant newspaper's confidential sources and information conveyed by them to defendant. Each appeal presents an important question: first, whether plaintiff corporation, as described in the complaint, was correctly held by the district court to be a "public figure", and must thus meet the standard of "actual malice", i. e., proof that defendant's statements were made "with knowledge that (they were) false or with reckless disregard of whether (they were) false or not", under New York Times Co. v. Sullivan, 376 U.S. 254, 280, 84 S.Ct. 710, 726, 11 L.Ed.2d 686 (1964); and second, whether, on the record so far established in this case, defendant has a privilege to refuse to reveal confidential sources relating to the subject matter of the statements sued upon.

Plaintiff, Bruno & Stillman, Inc. (hereinafter "the company"), is a Delaware corporation engaged in the manufacture and sale of commercial fishing boats with a principal place of business in New Hampshire. The defendant is the Globe Newspaper Company, publisher of the Boston Globe (hereinafter "the Globe "), with a principal place of business in Massachusetts. According to the facts alleged in the complaint, the company began building 35 to 55 foot fiberglass workboats in 1971, selling eight in that year. By dint of "enormous work and effort ... in manufacturing, promoting and selling boats", sales increased steadily, so that in 1977 the company sold nearly forty 35-foot boats, forty 42-footers, and ten 55-footers, and some newly introduced 35-foot pleasure boats. Between 1971 and the end of 1977 the company had sold over 400 boats "throughout the world" and had become the largest builder of fishing boats in New England. It enjoyed an "excellent reputation as a quality boat builder in the tough and competitive commercial fishing industry".

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On Sunday, December 25, 1977, the Globe published a full page story on the company. On the following day, the Globe published a second such story, occupying parts of three pages, over the byline of William P. Coughlin. Both stories listed and described alleged reports of some thirteen defects observed in one or more of five named boats built by the company. Critical comments of owners, surveyors, Coast Guard marine inspection officers, some company employees, and a repairman were narrated. Roughly a fifth of a page was devoted, under the caption of "Builder's Answers", to company comments on nine alleged defects. Three specific hull problems found in company-built boats-splitting of the bow, cracking of the keel, and water seepage into the balsa wood core between fiberglass layers-occupied the second article. A month later, on January 23 and 25, 1978, two more stories reported alleged defects that may have played a part in the sinking of two company-built boats on January 17 and 20. On January 26, the Globe carried an article in which the captain of one of the sunken vessels denied the company's claim that clogged scuppers were the cause, and gave the crew's opinion that the boat's skeg had separated from the bottom.

After the company complained to the Globe of distortions and inaccuracies, a final article was published in April of 1978, over the byline of the Globe's "Ombudsman", reviewing Coughlin's reporting of problems with 37 company-built boats, finding it "legitimate news" and fairly written, but noting matters that had come to light that were more favorable to the company and concluding that definitive answers were yet to be awaited.

The company, unsatisfied, brought suit on August 18, 1978. Count I sounds in negligence; Counts II and III allege intentional and malicious libel. 1 The prayer for relief seeks ten million dollars, costs, expenses, and attorney's fees. Discovery on the part of plaintiff ensued, resulting in the production by the Globe of some 1500 pages in 66 file folders of notes of the reporter Coughlin, but not including notes containing the names of and some information from three sources who were said to have given information in the expectation that their identity would be kept in confidence. A lengthy deposition of Coughlin revealed no information as to the role these sources had played in the series of Globe stories. In answering interrogatories the Globe stated that it would not rely at trial on any documents as to which a claim of confidential source is made. It acknowledged that there are reports, tests, or evaluations among such documents.

The district court, in responding to the Globe's motion to dismiss, took note of the efforts of the Supreme Court "to accommodate the First Amendment's guarantee of a free press with the competing interest which States have in protecting the reputation of natural persons", from New York Times Co. v. Sullivan, supra, to Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). Its essential reasoning and ruling were as follows:

"The crucial inquiry here is whether corporations, for purposes of the First Amendment, are more akin to public figures or private individuals. In the two key respects outlined in Gertz, corporations appear more like public figures. First, corporations often enjoy greater access to the channels of communication than do private individuals. Second, and more importantly, by engaging in the business of selling products, corporations voluntarily place before the public an issue of some importance regarding the quality and integrity of their products. In addition, corporations generally promote the sale of their products to the public by engaging in some form of advertising. Thus, at least to the extent that allegedly defamatory publications relate to the quality of the products which a corporation markets, I rule that corporations should be treated as public figures. Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 (N.D.Cal.1977); Reliance Insurance Co. v. Barron's,

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442 F.Supp. 1341, 1348-49 (S.D.N.Y.1977)."

Since all of the Globe's articles related to the quality of the company's products, plaintiff fitted within this context. The court dismissed the Count based on mere negligence and entered final judgment under Fed.R.Civ.P. 54(b).

Next, in dealing with plaintiff's request to compel discovery, the court drew on Herbert v. Lando, 441 U.S. 153, 99 S.Ct. 1635, 60 L.Ed.2d 115 (1979), which had declined, in a defamation suit by a public figure, to add to plaintiff's burdens by precluding inquiry into the editorial process. The district court also relied on Garland v. Torre, 259 F.2d 545 (2d Cir.), cert. denied, 358 U.S. 910, 79 S.Ct. 237, 3 L.Ed.2d 231 (1958), and adopted its prudential guidelines predicating disclosure of a confidential source on criticality of the information sought to plaintiff's claim, non-availability of the information from other sources, and non-frivolousness of plaintiff's cause of action. Finding these requirements satisfied, the court compelled disclosure of the confidential sources and the information derived therefrom. It certified an interlocutory appeal under 28 U.S.C. § 1292(b).

I. PUBLIC FIGURE

Before New York Times v. Sullivan, supra, defamation law strongly favored the state's interest in protecting reputation, approached strict liability, and gave little room to First Amendment considerations. Once a plaintiff put into evidence a reputation-harming statement and proof that defendant caused it to be disseminated, he enjoyed an irrebuttable presumption of injury and a rebuttable presumption of falsity. Eaton, The American Law of Defamation Through Gertz v. Robert Welch, Inc. and Beyond: An Analytical Primer, 61 Va.L.Rev. 1349, 1353 (1975) (hereinafter "Eaton"). In 1964 the Court in New York Times significantly changed the balance. It recognized, in Madison's phrase, that "(T)he censorial power is in the people over the Government", 376 U.S. at 275, 282, 84 S.Ct. at 721, 727; that keeping this power free of fetters called for "uninhibited, robust, and wide open" debate on public issues, id. at 270, 84 S.Ct. at 720; and that, since "erroneous statement is inevitable in free debate", even such a statement must be protected to a greater extent than was afforded by the mere defense of truth. Id. at 271-72, 84 S.Ct. at 721. Consequently, the Court held, public officials, in order to prevail in defamation suits, must establish "actual malice". Furthermore, not only must such knowledge of falsity or reckless disregard of truth be established but it must be established by clear and convincing proof. 2

It is relevant to our deliberations to recognize the almost decisive amplitude of "breathing space" surrounding defamatory falsehood, once a plaintiff is obliged to meet the New York Times standard. One commentator concludes that "(T)he constitutional privilege (recognized in New York Times ) in practical effect became a near-immunity from defamation judgments." Eaton, supra, at 1373. The Court in Gertz, supra, uses only slightly less emphatic language:

"This...

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