Brown & Williamson Tobacco Corp. v. Jacobson

Citation713 F.2d 262
Decision Date14 July 1983
Docket NumberNo. 82-2115,82-2115
Parties9 Media L. Rep. 1936 BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellant, v. Walter JACOBSON and CBS, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Patrick W. O'Brien, Michael J. O'Rourke, Hope G. Nightingale, Mayer, Brown & Platt, Chicago, Ill., Martin London, (argued), Todd Stern, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for plaintiff-appellant.

Lawrence Gunnels, Reuben & Proctor, Chicago, Ill., for defendants-appellees.

Before POSNER and COFFEY, Circuit Judges, and GRANT, Senior District Judge. *

POSNER, Circuit Judge.

This diversity suit brought by Brown & Williamson, the manufacturer of Viceroy cigarettes, charges CBS and Walter Jacobson with libel and other violations of Illinois law. Jacobson is a news commentator for WBBM-TV, a Chicago television station owned by CBS. The defendants moved to dismiss the complaint on a variety of grounds. Without writing an opinion the district court granted the motion "for the reasons set forth in defendants' memoranda," adding only: "to deny this motion would unduly restrict the freedom of the press and the right of a journalist to express opinions freely." Brown & Williamson appeals.

In 1975, Ted Bates, the advertising agency that had the Viceroy account, hired the Kennan market-research firm to help develop a new advertising strategy for Viceroy. Kennan submitted a report which stated that for "the younger smoker," "a cigarette, and the whole smoking process, is part of the illicit pleasure category.... In the young smoker's mind a cigarette falls into the same category with wine, beer, shaving, wearing a bra (or purposely not wearing one), declaration of independence and striving for self-identity. For the young starter, a cigarette is associated with introduction to sex life, with courtship, with smoking 'pot' and keeping late studying hours...." The report recommended, therefore, the following pitches to "young smokers, starters": "Present the cigarette as part of the illicit pleasure category of products and activities.... To the best of your ability, (considering some legal constraints), relate the cigarette to 'pot', wine, beer, sex, etc. Don't communicate health or health-related points." Ted Bates forwarded the report to Brown & Williamson. According to the allegations of the complaint, which on this appeal we must accept as true, Brown & Williamson rejected the "illicit pleasure strategy" proposed in the report, and fired Ted Bates primarily because of displeasure with the proposed strategy.

Years later the Federal Trade Commission conducted an investigation of cigarette advertising, and in May 1981 it published a report of its staff on the investigation. The FTC staff report discusses the Kennan report, correctly dates it to May 1975, and after quoting from it the passages we have quoted states that "B & W adopted many of the ideas contained in this report in the development of a Viceroy advertising campaign." In support of this assertion the staff report quotes an internal Brown & Williamson document on "Viceroy Strategy," dated 1976, which states, "The marketing efforts must cope with consumers' attitudes about smoking and health, either providing them a rationale for smoking a full flavor VICEROY or providing a means of repressing their concerns about smoking a full flavor VICEROY." The staff report then quotes a description of three advertising strategies. Although the description contains no reference to young smokers or to "starters," the staff report states: "B & W documents also show that it translated the advice [presumably from the Kennan report] on how to attract young 'starters' into an advertising campaign featuring young adults in situations that the vast majority of young people probably would experience and in situations demonstrating adherence to a 'free and easy, hedonistic lifestyle.' " The interior quotation is from another 1976 Brown & Williamson document on advertising strategy.

On November 4, 1981, a reporter for WBBM-TV called Brown & Williamson headquarters and was put in touch with a Mr. Humber in the corporate affairs department. The reporter told Mr. Humber that he was preparing a story on the tobacco industry for Walter Jacobson's "Perspective" program and asked him about the part of the FTC staff report that dealt with the Viceroy advertising strategy. Humber replied that Brown & Williamson had rejected the proposals in the Kennan report and had fired Ted Bates in part because of dissatisfaction with those proposals.

Walter Jacobson's "Perspective" on the tobacco industry was broadcast on November 11 and rebroadcast on November 12 and again on March 5, 1982. In the broadcast, Jacobson, after stating that "pushing cigarettes on television is prohibited," announces his theme: "Television is off limits to cigarettes and so the business, the killer business, has gone to the ad business in New York for help, to the slicksters on Madison Avenue with a billion dollars a year for bigger and better ways to sell cigarettes. Go for the youth of America, go get 'em guys .... Hook 'em while they are young, make 'em start now--just think how many cigarettes they'll be smoking when they grow up." Various examples of how cigarette marketing attempts "to addict the children to poison" are given. The last and longest concerns Viceroy.

The cigarette business insists, in fact, it will swear up and down in public, it is not selling cigarettes to children, that if children are smoking, which they are, more than ever before, it's not the fault of the cigarette business. "Who knows whose fault it is?" says the cigarette business. That's what Viceroy is saying, "Who knows whose fault it is that children are smoking? It's not ours."

Well, there is a confidential report on cigarette advertising in the files of the Federal Government right now, a Viceroy advertising, the Viceroy strategy for attracting young people, starters they are called, to smoking--"FOR THE YOUNG SMOKER .... A CIGARETTE FALLS INTO THE SAME CATEGORY WITH WINE, BEER, SHAVING OR WEARING A BRA...." says the Viceroy strategy--"A DECLARATION OF INDEPENDENCE AND STRIVING FOR SELF-IDENTITY." Therefore, an attempt should be made, says Viceroy, to "... PRESENT THE CIGARETTE AS AN INITIATION INTO THE ADULT WORLD," to "... PRESENT THE CIGARETTE AS AN ILLICIT PLEASURE ... A BASIC SYMBOL OF THE GROWING-UP, MATURING PROCESS." An attempt should be made, says the Viceroy slicksters, "TO RELATE THE CIGARETTE TO 'POT', WINE, BEER, SEX. DO NOT COMMUNICATE HEALTH OR HEALTH-RELATED POINTS." That's the strategy of the cigarette slicksters, the cigarette business which is insisting in public, "We are not selling cigarettes to children."

They're not slicksters, they're liars.

While Jacobson is speaking these lines the television screen is showing Viceroy ads published in print media in 1980. Each ad shows two packs of Viceroys alongside a golf club and ball.

The complaint charges that the broadcast made statements about Brown & Williamson that the defendants knew to be false and that not only were libelous per se and injurious to Brown & Williamson but also wrongfully interfered with Brown & Williamson's business relations and violated two Illinois statutes, the Consumer Fraud and Deceptive Business Practices Act, Ill.Rev.Stat.1981, ch. 121 1/2, pp 261 et seq., and the Uniform Deceptive Business Trade Practices Act, Ill.Rev.Stat.1981, ch. 121 1/2, pp 311 et seq. We begin with the defamation count. Since the district court accepted all of the grounds for dismissal advanced by the defendants, we must decide whether any of these grounds--other than those abandoned in this court, as some have been--supports dismissal.

One ground is that the broadcast is not libelous per se. If it is not, the complaint does not state a claim under the Illinois common law of defamation (the parties agree that Illinois law governs all of the substantive issues in this diversity case) unless it adequately alleges special damage, which the district court found it did not.

Under traditional principles, a finding of libel per se ("per se" in defamation law meaning just that pecuniary damage--"special damage"--need not be proved) requires only that the defamatory character of the statement alleged to be libelous be apparent on the face of the statement, or in other words that "extrinsic facts" not be necessary to make the statement defamatory. (If the statement was that Mrs. Jones had given birth on January 11, 1939, the extrinsic fact necessary to complete the libel might be that Mrs. Jones had married the child's father the previous month.) The defendants admitted at oral argument that the fact that Walter Jacobson's broadcast did not mention Brown & Williamson by name was not an extrinsic fact in this sense. See Hambric v. Field Enterprises, Inc., 46 Ill.App.2d 355, 359, 196 N.E.2d 489, 492 (1964); Harwood Pharmacal Co. v. National Broadcasting Co., 9 N.Y.2d 460, 214 N.Y.S.2d 725, 174 N.E.2d 602 (1961). The reason for distinguishing between statements that are and statements that are not libelous on their face is that the impact of an apparently innocuous statement will be limited to the presumably small group of readers who know additional facts, so damage cannot be presumed but must be proved. The Jacobson broadcast was not innocuous on its face, and the fact that Brown & Williamson was not mentioned by name is relevant not to whether the broadcast was libel per se but to the distinct question whether it would be understood as referring to Brown & Williamson rather than to someone else. The defendants do not deny it would be.

So the broadcast is libel per se in the traditional sense--unless the aspersions that it casts on Brown & Williamson's corporate character cannot be considered defamatory at all, which is hardly tenable. But Illinois has abolished the distinction...

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