759 F.2d 90 (D.C. Cir. 1985), 83-1604, Tavoulareas v. Piro

Docket Nº:83-1604, 83-1605.
Citation:759 F.2d 90
Party Name:William P. TAVOULAREAS, Appellant, Peter Tavoulareas v. Philip PIRO. William P. TAVOULAREAS, Appellant, Peter Tavoulareas v. The WASHINGTON POST COMPANY, d/b/a the Washington Post, a Delaware Corporation, et al.
Case Date:April 09, 1985
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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759 F.2d 90 (D.C. Cir. 1985)

William P. TAVOULAREAS, Appellant,

Peter Tavoulareas

v.

Philip PIRO.

William P. TAVOULAREAS, Appellant,

Peter Tavoulareas

v.

The WASHINGTON POST COMPANY, d/b/a the Washington Post, a

Delaware Corporation, et al.

Nos. 83-1604, 83-1605.

United States Court of Appeals, District of Columbia Circuit

April 9, 1985

Argued Feb. 10, 1984.

Rehearing Denied June 11, 1985.

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John J. Walsh, New York City, of the Bar of the Court of Appeals of N.Y., pro hac vice by special leave of Court, with whom Joseph A. Artabane, Washington, D.C. and Charles Alan Wright, Austin, Tex., were on brief, for appellant.

David E. Kendall, Washington, D.C., with whom Irving Younger, Kevin T. Baine and Scott M. Matheson, Jr., Washington, D.C., were on brief, for appellees The Washington Post Co. and Patrick E. Tyler.

H. Bartow Farr, III, Washington, D.C., with whom Paul M. Smith, Washington, D.C., was on brief, for appellee Sandy Golden.

David Machanic, Washington, D.C., for appellee Philip Piro.

Daniel J. Popeo, Washington, D.C., was on brief for amicus curiae, American Legal Foundation, urging reversal.

Before WRIGHT and SCALIA, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge MacKINNON.

Opinion concurring in part and dissenting in part filed by Circuit Judge J. SKELLY WRIGHT.

TABLE OF CONTENTS Page I. BACKGROUND FACTS.................................................. 98 II. THE LEGAL STANDARD................................................ 103 III. DEFAMATION AND FALSITY............................................ 109 1. Defamatory Character of the November 30 Article.............. 109 2. Falsity...................................................... 111 IV. RECKLESS DISREGARD OF TRUTH OF FALSITY — ACTUAL MALICE............ 114 1. The Christine Peterson Memorandum............................ 114 2. The Defendants' Motivation................................... 117 3. Resolution of Inferences Adverse to the Plaintiffs........... 121 4. Suppression of Information Favorable to the Plaintiffs....... 123 5. "Personally Dispatched": The Checket Conversation............ 125 6. The SEC Paragraphs........................................... 126 7. Reliability of Sources....................................... 127 A. Piro..................................................... 128 B. Comnas................................................... 129 8. Other Indicia of Actual Malice............................... 131 9. The Defendants' Evidence..................................... 132 10. Some of Defendants' Suggested Inferences from the Evidence... 133 11. Summary...................................................... 134 V. THE VERDICT AGAINST PIRO.......................................... 135 VI. THE VERDICT AGAINST GOLDEN........................................ 136 VII. CONCLUSION........................................................ 137 APPENDIX................................................................ 138 Page 98

MacKINNON, Senior Circuit Judge.

Plaintiffs William and Peter Tavoulareas brought suit against The Washington Post ("Post") and several other defendants for libel and against defendant Piro, a source for the story, for slander and its foreseeable republication. The Tavoulareases alleged that they were defamed by articles in the Post which stated, among other things, that William Tavoulareas, as President and Chief Executive Officer of Mobil Oil Corporation ("Mobil"), had used his influence to "set up" his son Peter in the shipping business, and then had diverted some of Mobil's shipping business to him. The basic theme of the article was that William Tavoulareas had misused his position and corporate assets to benefit his son. The case was submitted to the jury, which was instructed, in accordance with standards constitutionally required for public figures, that defendants could be held liable only if they published false matter with "actual malice"--i.e., with knowledge of its falsity or reckless disregard of whether it was false or not. The jury returned verdicts for the plaintiffs. The trial judge then ruled on motion that the evidence was insufficient to support such a verdict and entered judgment notwithstanding the verdict ("n.o.v.") for the defendants. Tavoulareas v. Washington Post Co., 567 F.Supp. 651 (D.D.C.1983). After a careful and independent review of the entire record in the case, we conclude that the evidence adduced by the plaintiffs was sufficient to "establish [ ] actual malice with convincing clarity," Bose Corp. v. Consumers Union of United States, --- U.S. ----, ----, 104 S.Ct. 1949, 1967, 80 L.Ed.2d 502 (1984), and accordingly reverse the grant of the judgments n.o.v. as to the Post defendants and defendant Piro, and remand the case to the district court for further proceedings. We affirm the trial court's judgment n.o.v. with respect to defendant Golden because of his lack of responsibility for the publication.

I. BACKGROUND FACTS

The business relationships that gave rise to this case began in 1974, when Mobil bought a 30 percent interest in the Saudi Arabian Maritime Company ("Samarco"), a joint venture that had been formed a short time before by Fairfield Maxwell Ltd. and members of a powerful Saudi Arabian family, the Alirezas. The Alirezas were the majority shareholders in Samarco. Mobil bought a minority interest in Samarco because, at that time, Mobil believed the Saudi government was going to give strong oil shipping preferences to Saudi-owned shippers. Ultimately, however, these preferences were never adopted by the Saudi government.

The Samarco partners agreed to hire an outside firm to manage the ships that Samarco would operate. Mobil suggested Atlas Maritime Company, a new venture being formed by Greek shipping executive George Comnas. Comnas had previously worked for the Greek maritime firm of C.M. Lemos & Co., where Peter Tavoulareas, a 24-year-old graduate of the Master of Business Administration program at Columbia University, was also employed as a junior executive. Peter had first approached Lemos in August, 1972 with respect to employment and by January 1, 1973 had started working in the shipping business with C.M. Lemos & Co. (Trial Transcript (Tr.) 2385, 2387, 2451).

Mobil owned a fleet of oil tankers. It wanted some of those ships to be operated under Samarco's name in order to get the expected shipping preference. Mobil agreed to "bareboat charter" its ships (i.e., charter the ships empty and unmanned) to Samarco, which would in turn "time charter" them (i.e., charter the vessels complete with crews and provisions) back to Mobil. 1

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Mobil thus in a sense was "chartering" its own ships to itself and essentially obtaining its crews and provisions through Samarco. 2 In admiralty law "for many, if not most, purposes the bareboat charterer is to be treated as the owner" of the chartered vessel. Reed v. The Yaka, 373 U.S. 410, 412, 83 S.Ct. 1349, 1352, 10 L.Ed.2d 448 (1963). Thus, the contractual arrangement placed considerable responsibility upon Samarco for Mobil's ships. Samarco, for its part, obtained crews and provisions through its management firm, Atlas.

Comnas, in setting up Atlas, asked two young coworkers at Lemos, Peter Tavoulareas and Ares Emmanuel, to join him as partners. When Peter joined Atlas in August 1974, his father William notified Mobil's Conflict of Interest Committee and formally removed himself from taking part in decisions regarding Atlas. 3 The Mobil Committee found no impropriety in the arrangement, which was fully disclosed to the Mobil Board of Directors.

Comnas was forced out of Atlas a year later, in 1975, ostensibly because of self-dealing, fraudulent practices, and dissatisfaction with his performance on the part of Mobil and the Saudis. He was placed on Mobil's payroll as a consultant, and Atlas reimbursed Mobil for his salary. Mobil sent Harmon Hoffmann, 4 a Mobil shipping executive, to act as interim head of Atlas. Hoffmann was offered Comnas' share of Atlas stock (Tr. 4151), but turned down the offer to become an equity partner, and after six months returned to Mobil. Peter Tavoulareas and Emmanuel then assumed the management duties of Atlas. Atlas prospered during the succeeding years; by 1979 it apparently was operating 17 ships, including 7 for Samarco, only 4 of which were Mobil's.

The Mobil-Samarco-Atlas relationship--and specifically the Tavoulareas-Atlas connection--was explained to Mobil shareholders in a 1976 letter. At about the same time, a party or parties sent anonymous letters to a number of newspapers, alleging that the arrangement violated the federal securities laws. One of those letters went to reporter Robert Woodward of the Post. Woodward, along with reporters for several other newspapers, investigated the anonymous charges; but none of them apparently found any wrongdoing, and no stories were published. The Securities and Exchange Commission, which obtained a copy of one of the letters, launched an informal investigation and called upon William Tavoulareas to testify in non-public proceedings. The SEC found no impropriety.

Evidence presented by the plaintiffs showed that Mobil did not exert control over Samarco, in which it was a minority shareholder, and that all of the decisions relating to Atlas were approved by the controlling Saudi partners. The arrangement was fully disclosed to Mobil's Conflicts of Interest Committee, Mobil's Board of Directors, and to the company's shareholders. Evidence indicated that Mobil and its shareholders had derived economic benefits...

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