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

• Decision Date: 26 November 1996
• Docket Number: No. 57A03-9407-CV-248,JOURNAL-GAZETTE,57A03-9407-CV-248
• Citation: 672 N.E.2d 969
• Parties: COMPANY, INC., Appellant-Defendant, v. BANDIDO'S, INC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 969

672 N.E.2d 969

JOURNAL-GAZETTE COMPANY, INC., Appellant-Defendant, v. BANDIDO'S, INC., Appellee-Plaintiff.

No. 57A03-9407-CV-248.

Court of Appeals of Indiana.

Nov. 26, 1996.

James P. Fenton, Cathleen M. Shrader, Barrett & McNagny, Fort Wayne, for Appellant-Defendant.

Edward L. Murphy, Jr., Diana C. Bauer, Miller Carson Boxberger & Murphy, Fort Wayne, Robert E. Connolly, O'Dowd Wyneken & Connolly, Fort Wayne, for Appellee-Plaintiff.

OPINION

GARRARD, Judge.

The Journal-Gazette Company, Inc. appeals the jury verdict entered in favor of Bandido's, a Mexican restaurant chain, in this libel action. We reverse.

FACTS

Bandido's operates three Mexican restaurants in Fort Wayne, Indiana and one in Lima, Ohio. On September 13, 1988, the Fort Wayne-Allen County Board of Public Health (Board of Health) inspected the Bandido's restaurant located in the Northcrest Shopping Center in Fort Wayne. Numerous violations were found, including "evidence of flies, roaches and rodents noted. Advise exterminator to do a full clean out of premise[s]. Rodent droppings noted only in restroom." (R. 1137). Soon thereafter, a pest control service conducted a full clean-out of the restaurant.

On October 4, the Board of Health conducted a second inspection in connection with a hearing scheduled the following day to determine whether to close the restaurant. While there were still several health code violations, there was no evidence of any insects or rodents. After the hearing on October 5, the Board of Health revoked Bandido's food service permit and closed the restaurant, based upon all inspections conducted in 1988. ¹

On October 6, 1988, after obtaining copies of both inspection reports, the Journal ran a story on the front page of the metro-state section regarding the problems at the Bandido's restaurant with the following headline:

Health board shuts doors of Bandido's

Investigators find rats, bugs at north-side eatery

(R. 1189). The story was published in the first edition, or the "Ohio Edition," which is circulated in northwest Ohio, with a slightly different subheadline: "Inspectors find rats, roaches at local eatery." (R. 1190). While the story also appeared in the second edition, or the "Indiana Edition," which is circulated in Indiana outside of Allen County, the subheadline was deleted. The "Final Edition," circulated throughout Allen County, contained both the story and above headlines.

June Remley, a reporter for the Journal, wrote the article at issue after reviewing the inspection reports regarding Bandido's. Through the editing process, the article was transmitted to Sheila Pinkley, a copy editor. It was Pinkley's responsibility to perform a final edit and write an appropriate headline for the article. Pinkley read the article and realized that while the word "rodents" appeared in the text, the word "rats" did not. However, she used the word "rats" in the subheadline, concluding that the word "rodents" suggested "rats." After Pinkley edited the article, it was sent to William Leonard, the Journal's copy desk chief. Leonard did not conduct a word-by-word review of the article, but he saw the words "rodents" and "roaches" and believed that these supported the headline. However, he stated that, if he had realized that the word "rats" did not appear in the article, he would have changed the headline. Ellen Garner, a news editor, next reviewed the article, and the article was then forwarded to Tom Jones, a copy editor responsible for reading the page proofs. Neither Garner nor Jones noticed that the word "rats" did not appear in the article.

With regard to headlines, the policy of the Journal was that, if a word appears in a headline, it should also appear in the text of the article. The Journal also made periodic employee evaluations. Pinkley's job performance evaluation in July of 1988 indicated a weakness in her ability to write news headlines: "[Y]our headline performance lacks consistency. There have been instances when you produced inaccurate heads--and this is something we just can't have." (R. 1625). Leonard's job performance evaluation in March of 1988 stated:

[I]t's time to concentrate on Sheila [Pinkley].... She has potential and needs a guiding hand, particularly in headline writing. Despite all the successes in the headline area, there are still headlines that are vague, off-target or inappropriate. Sometimes those heads appear when you are in slot; more often they appear on your days off. But as a manager, one of your tasks is to develop the staff so that it is not obvious when you are off duty. Your guidance should show through the paper regardless of your actual presence.

(R. 1632).

At trial, a journalism expert for Bandido's testified that the word "rats" should not have appeared in the subheadline and that it was extremely careless for the error to have occurred. The expert further testified that, from a journalistic perspective, there is no difference between extreme carelessness and reckless disregard. A journalism expert for the Journal agreed that it was a mistake for the word "rats" to appear in the headline. Indeed, there was little dispute at trial that the Journal made a mistake. Leonard readily conceded as much, but he further indicated that he saw no particular danger in using the word "rats." However, several witnesses who were readers of the Journal testified that the word "rats" had left a derogatory impression on them. Bandido's expert testified that using the word "rats" in conjunction with a restaurant was an extremely sensitive issue and should have alerted the Journal to use extra care in publishing the headline.

The same day that the article was published, the owner of Bandido's and his attorney met with representatives of the Journal, demanding an immediate and full headline retraction based upon the fact that there was no evidence of rats found at the restaurant. The Journal refused to print a headline retraction, but did publish a retraction in a follow-up article published the next day regarding the expected reopening of the restaurant:

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.

(R. 1203). These were the third and fourth paragraphs in an article favorable to Bandido's which included quotes from Bandido's owner. ² After publication Bandido's attorney sent two letters to the Journal expressing satisfaction with the retraction. However, the owner of Bandido's was not satisfied, and on October 18, 1988, Bandido's demanded a full retraction in compliance with Ind.Code § 34-4-15-1. Upon the Journal's refusal, Bandido's filed suit on November 21, 1988.

In Bandido's, Inc. v. Journal Gazette Co., Inc., 575 N.E.2d 324 (Ind.Ct.App.1991), reh'g denied, trans. denied (Bandido's I), we reversed the trial court's entry of summary judgment, finding that there remained a factual dispute on the issue of whether the Journal published the article with actual malice. At trial, the jury returned a verdict in favor of Bandido's in the amount of $985,000.00, and the Journal now appeals.

DISCUSSION

The parties raise numerous issues for our review; however, we address only the following issue: Whether the evidence was sufficient to demonstrate by clear and convincing evidence that the Journal published the subheadline with actual malice. We conclude that the evidence was insufficient.

Under the First and Fourteenth Amendments to the United States Constitution, public officials and public figures may not recover for defamation absent a showing by clear and convincing evidence that the defendant published a defamatory falsehood with actual malice. New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964) (requiring actual malice for public officials); see Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967) (requiring actual malice for public figures). A defamatory falsehood is made with "actual malice" when it is published "with knowledge that it was false or with reckless disregard of whether it was false or not." New York Times, 376 U.S. at 279-280, 84 S.Ct. at 726.

In order to prove that a defendant published with reckless disregard, "[t]here must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968); Chester v. Indianapolis Newspapers, Inc., 553 N.E.2d 137, 140 (Ind.Ct.App.1990), reh'g denied, trans. denied. Evidence of an extreme departure from professional journalistic standards, without more, cannot provide a sufficient basis for finding actual malice. Harte-Hanks Communications, Inc. v. Connaughton, 491 U.S. 657, 665, 109 S.Ct. 2678, 2685, 105 L.Ed.2d 562 (1989). However, "it cannot be said that evidence concerning motive or care never bears any relation to the actual malice inquiry." Id. at 667, 109 S.Ct. at 2686. While the standard is clearly a subjective one,

[p]rofessions of good faith [by a defendant in a defamation action] 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, 390 U.S. at 732, 88 S.Ct. at 1326.

The first issue the parties dispute is whether Bandido's is a private or a public figure. In Indiana, the actual malice standard applies to a private individual who...