Gannett Co., Inc. v. Kanaga

• Decision Date: 03 May 2000
• Docket Number: No. 352, 1998.,352, 1998.
• Parties: GANNETT CO., INC., t/a the News Journal Company, and Jane Harriman, Defendants Below, Appellants/Cross-Appellees, v. Margo KANAGA, M.D., Plaintiff Below, Appellee/Cross-Appellant.
• Court: United States State Supreme Court of Delaware

750 A.2d 1174

GANNETT CO., INC., t/a the News Journal Company, and Jane Harriman, Defendants Below, Appellants/Cross-Appellees, v. Margo KANAGA, M.D., Plaintiff Below, Appellee/Cross-Appellant.

No. 352, 1998.

Supreme Court of Delaware.

Submitted: November 23, 1999.

Decided: May 3, 2000.

Mason E. Turner, Jr., Prickett, Jones, & Elliott, Wilmington, Delaware, for Gannett Co., Inc., t/a The News Journal Company Appellant/Cross-Appellee and Robert C. Bernius (argued), Nixon Peabody, LLP., Washington, D.C., for Jane Harriman Appellant/Cross-Appellee.

James S. Green, Seitz, Van Ogtrop & Green, P.A., Wilmington, Delaware, for Margo Kanaga, M.D. Appellee/Cross-Appellant.

Charles S. Crompton, Jr. and Philip A. Rovner, Potter Anderson & Corroon LLP, Wilmington, Delaware and Floyd Abrams and Gail Johnston, Esquire, Cahill Gordon & Reindel, New York, New York, for Amici Curiae. Of Counsel: Ralph Huber, Esquire, Sabin, Bermant & Gould, New York, New York, for Advance Publications, Inc.; Richard N. Winfield, Esquire and Margaret Blair Soyster, Rogers & Wells, New York, New York, for The Associated Press; David Kohler, Atlanta, Georgia, for Cable News Network LP, LLLP; Stuart Karle, New York, New York, for Dow Jones Company, Inc.; Carol D. Melamed, Washington, D.C., for Maryland, Delaware, District of Columbia Press Association; George Freeman, Esquire, New York New York, for The New York Times Company; Katherine Hatton, Philadelphia, Pennsylvania, for The Philadelphia Inquirer; Robin Bierstedt, New York, New York, for Time Inc.; and Mary Ann Werner, Washington, D.C., for The Washington Post.

Before VEASEY, Chief Justice, WALSH, HOLLAND, and HARTNETT, Justices and CHANDLER, Chancellor.¹ WALSH, Justice for the majority

This is an appeal from a Superior Court judgment in a libel action following a jury verdict assessing damages. The plaintiff-appellee, Margo Kanaga, M.D. ("Dr. Kanaga") claimed to have been libeled by a newspaper account of her treatment of a former patient, Pamela Kane ("Kane"). The article in question was written by Jane Harriman ("Harriman") and published in a daily newspaper distributed by Harriman's employer, Gannett Co., Inc. t/a The News Journal Company ("Gannett"). Gannett and Harriman (collectively the "media defendants") defended the article as a substantially accurate report of a complaint to the New Castle County Medical Society and, thus, constitutionally protected.

The jury determined, through answers to specific interrogatories, that the article was factually false and defamatory. The jury also determined that the article caused actual damage to Dr. Kanaga, awarding her $2.6 million in compensatory damages and $250,000 in punitive damages. The jury made separate compensatory and punitive damage awards against Kane. The awards against Kane, however, have not been appealed.

In this appeal, the media defendants contend that the article in dispute was constitutionally protected fair comment and, as a matter of law, not defamation. They also challenge the award of actual damages on the ground that it was based on speculation and inadmissible expert testimony. Dr. Kanaga cross-appeals from the Superior Court's exclusion of evidence of Gannett's wealth in relation to the proof of punitive damages.

We conclude that the jury's determination of liability is sustainable factually and is consistent with the law of the case. We further conclude, however, that the jury's verdict fixing actual damages was based upon expert testimony, to which timely objection was made, that lacked an admissible foundation. Accordingly, we reverse the damages award. With respect to the cross-appeal, we hold that under the modern view on punitive damages, the wealth of the defendant is an admissible factor and reverse the Superior Court's holding to the contrary. In sum, we affirm the determination of liability but reverse the award of both actual and punitive damages and remand for a new trial limited to damages.

I

The factual basis for this litigation is set forth at length in a previous decision of this Court that reversed a grant of summary judgment in favor of the defendants. See Kanaga v. Gannett Co. Inc., Del.Supr., 687 A.2d 173 (1996)

("Kanaga I"). We briefly summarize those facts as they unfolded at trial.

Kane consulted Dr. Kanaga on April 2, 1992, after complaining of a heavy menstrual flow. During a physical examination, Dr. Kanaga observed a fibroid tumor "sitting in her cervix." Dr. Kanaga told Kane about the tumor and that its position would prevent her from doing a myomectomy (removal by surgical forceps). Dr. Kanaga recommended a hysterectomy for treatment of the tumor and also recommended that Kane have her ovaries and tubes removed because of a risk of ovarian cancer. Dr. Kanaga testified that she discussed with Kane her opinion that a myomectomy would be a risky procedure and not the safest or best method for treatment considering Kane's age and the position of the tumor. Dr. Kanaga, however, advised Kane to obtain a second opinion. On April 10, 1992, Dr. Kanaga's office received a request by Kane for a copy of her medical records in order to obtain a second opinion.

On April 19, 1992, Kane experienced heavy bleeding and consulted Ronaldo Domingo, M.D. ("Dr. Domingo") at the emergency room at St. Francis Hospital. Apparently, the tumor had changed position, because, upon examination, Dr. Domingo observed the tumor "coming two-thirds out of the canal." Dr. Domingo attempted to determine whether the fibroid could be easily removed by grabbing it with forceps and twisting it. After twisting it several times, the fibroid came out. Subsequently, Kane asked Dr. Domingo whether she needed a hysterectomy. Since Kane had told him previously that another doctor had recommended a hysterectomy, Dr. Domingo was not surprised by this question, but told Kane that she did not need one "because she's no longer bleeding and the submucous fibroid is out."

On April 29, 1992, Kane called Dr. Kanaga's office to discuss scheduling a hysterectomy. Dr. Kanaga returned the call the next morning but was told Kane was unavailable and would call her that afternoon. When Kane called Dr. Kanaga, Kane secretly tape recorded the conversation.² During this conversation, Kane led Dr. Kanaga to believe that she had received a second opinion concerning the hysterectomy.

Kane, apparently believing that Dr. Kanaga had recommended an unnecessary surgical procedure for financial gain, contacted Harriman, a reporter for the News Journal who reported on health matters. The two met at Kane's home, and Harriman was told Kane's version of the events, including the playing of the secretly recorded telephone conversation. Approximately one week later, Kane filed a written complaint with the New Castle County Medical Society alleging that Dr. Kanaga had recommended an unnecessary surgical procedure for financial gain. Kane had earlier shared this complaint with Harriman.

Harriman proceeded to write an article detailing Kane's experience with Dr. Kanaga. Before the article was published, there was an apparent difference of opinion at the News Journal whether publication should be deferred pending the Medical Society action on Kane's complaint. Harriman testified that she recommended that "we wait until after the New Castle County Medical Society makes a decision." She was overruled, however, by her editorial supervisors.

On July 5, 1992, the newspaper article in question was published entitled "Patient feels betrayed — Says proposed hysterectomy wasn't needed." The full text is printed in Kanaga I, 687 A.2d at 184-85. The theme of the article is captured in its opening paragraph:

BRANDYWINE HUNDRED — Pamela Kane feels the hysterectomy urged on her by a gynecologist she trusted would have been unnecessary, and she believes her story should be a warning to other women.

The disputed article appeared in full color on the front page of the Local Section of the July 5, 1992, Sunday News Journal. It was announced by a "teaser" on page 1 of the newspaper which included a photograph of Kane. Although the article noted that Dr. Kanaga had refused "to respond to a reporter's telephone calls or a reporter's letter seeking comments," it did not fully explain Dr. Kanaga's refusal, on ethical grounds, to discuss a patient's care or records in a matter pending before the Medical Society without written authorization of the patient. The article also described Dr. Domingo's reaction to Dr. Kanaga's treatment recommendation as "incredulous" even though Harriman had not verified the direct quotes attributed to Dr. Domingo.

The Medical Society ruled on Kane's complaint against Dr. Kanaga eight weeks after publication of the article. It found no basis for discipline against Dr. Kanaga, ruling, in effect, that a hysterectomy was "one of several appropriate therapies" for Kane's condition. The News Journal reported the Medical Society's ruling in an article headlined "Medical Unit Backs Doctor on Treatment."

The case was submitted to the jury in two phases through special interrogatories. In the first phase, the jury found, as to the media defendants, that: (i) the July 5 article was defamatory; (ii) the gist of the article was false; (iii) the statements were factual in nature; and (iv) that the article was negligently published. The jury fixed actual damages in the amount of $2.6 million. The second phase of the trial involved the presentation of evidence of punitive damages. As to the media defendants, the jury concluded that Dr. Kanaga had shown by clear and convincing evidence that both defendants had caused the July 5 article to be published with knowledge of its falsity and had acted outrageously. The jury awarded $250,000 in punitive damages against Gannett and $10,000 against Harriman.

II

The media defendants, Gannett and Harriman (hereafter "Gannett"), have asserted claims of error directed to both the liability and damages determination of...