817 F.2d 762 (D.C. Cir. 1987), 83-1604, Tavoulareas v. Piro

Docket Nº:83-1604, 83-1605.
Citation:817 F.2d 762
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:March 13, 1987
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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817 F.2d 762 (D.C. Cir. 1987)

William P. TAVOULAREAS, Appellant,

Peter Tavoulareas


Philip PIRO.

William P. TAVOULAREAS, Appellant,

Peter Tavoulareas


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

March 13, 1987

Argued En Banc Oct. 3, 1985.

As Amended March 24 and May 22, 1987.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the District of Columbia (D.C. Civil Actions Nos. 80-2387 & 80-3032).

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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 Charles Alan Wright, Austin, Tex., was on the brief, for appellant. Abel J. Mattos, Washington, D.C., entered an appearance, for appellant.

Edward Bennett Williams, with whom David E. Kendall and Kevin T. Baine, Washington, D.C., were on the brief, for appellees The Washington Post Company et al.

David Machanic and Robert A. Feitel, Washington, D.C., were on the brief for appellee Philip Piro.

Judah Best and Loren Kieve, Washington, D.C., entered appearances for appellee-intervenors Mobil Corp. and Mobil Oil Corp.

J. Laurent Scharff, Jane E. Kirtley, James P. Mercurio and Rodney F. Page were on the brief for amici curiae Reporters Committee for Freedom of the Press et al. David Machanic, Jack C. Landau, Robert B. Bruce and Anthony C. Epstein, Washington, D.C., entered appearances for these amici in support of appellees.

Michael P. McDonald was on the brief for amicus curiae The American Legal Foundation in support of appellant.

Floyd Abrams, Dean Ringel, George Freeman, New York City, W. Terry Maguire, Richard M. Schmidt, Jr., Washington, D.C., R. Bruce Rich, Lauren W. Field, New York City, and Steven A. Bookshester, Washington, D.C., were on the brief for amici curiae American Broadcasting Companies, Inc. et al. in support of appellees.

R. Bruce Rich, New York City, entered an appearance for amici curiae American Publishers, Inc. et al. in support of appellees.

Before WALD, Chief Judge, ROBINSON, MIKVA, EDWARDS, RUTH BADER GINSBURG, SCALIA [*], and STARR, Circuit Judges [**], and WRIGHT and MacKINNON, Senior Circuit Judges.

Opinion for the court filed by Circuit Judge STARR and Senior Circuit Judge J. SKELLY WRIGHT.

Opinion concurring in the judgment filed by Chief Judge WALD.

Concurring opinion filed by Circuit Judge RUTH BADER GINSBURG.

Dissenting opinion filed by Senior Circuit Judge MacKINNON.

STARR, Circuit Judge and J. SKELLY WRIGHT, Senior Circuit Judge:

William Tavoulareas and his son Peter brought suit for injury to reputation after The Washington Post published a story that said, among other things, that Tavoulareas had used his influence as president of Mobil Corporation to "set up" Peter as a partner in a shipping firm whose business included a multi-million dollar management services contract with Mobil. After a jury trial in the United States District Court for the District of Columbia, Judge Oliver Gasch awarded judgment notwithstanding the verdict to the Post defendants. 567 F.Supp. 651 (D.D.C.1983). A divided panel of this court reinstated the jury's verdict, 759 F.2d 90 (D.C.Cir.1985), but the full court vacated that portion of the panel opinion and set the case for rehearing en banc, 763 F.2d 1472, 1481 (D.C.Cir.1985).

After a careful review of the entire record in the light most favorable to plaintiff, we are convinced that the only reasonable inference to be drawn is that the "set up" allegation was substantially true. We further hold that Tavoulareas is a limited

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purpose public figure who can recover for defamation only upon clear and convincing proof that defendants acted with actual malice. Because insufficient evidence exists in the record to support a finding of constitutional malice with respect to any of the defendants, we affirm entirely the District Court's decision.


At trial, the parties presented conflicting evidence concerning Mobil's and Tavoulareas' involvement with Peter's shipping firm. The following account adopts the undisputed facts and Tavoulareas' version of disputed events.

  1. Mobil-Samarco-Atlas

    William Tavoulareas was at all relevant times president and chief operating officer of Mobil Corporation, the Nation's second largest oil company and its third largest industrial corporation. In his position at Mobil, Tavoulareas took an active role in the public debate during the 1970's over the manner in which the United States should respond to the rise of OPEC and the ensuing energy crisis. In particular, Tavoulareas vigorously defended the performance of the oil industry against critics who called for sweeping reforms in the structure and management of the industry, and he publicly advocated less governmental regulation of the industry as the solution to the energy shortage. In addition, he was an important proponent of Mobil's "Saudi strategy" of dependence on Arab oil supplies at a time when increasing American energy independence became a significant public policy objective.

    In 1973, a group of influential Saudis approached Mobil with a plan for a jointly owned shipping company. The group included the Alirezas, a prominent merchant family in Saudi Arabia that had other business relationships with Mobil. 1 The plan called for Mobil to furnish the capital for the proposed company, which would transport Saudi crude in its ships. At that time, it was widely anticipated that Saudi Arabia would soon establish a preference system requiring that Saudi crude be shipped in Saudi vessels. If Mobil, which depended heavily on Saudi supplies, were forced to use Saudi-owned ships, much of Mobil's own large fleet would then be idled. Mobil initially rejected the offer, whereupon the Saudis found another partner, Fairfield-Maxwell. The resulting venture was called Samarco--the Saudi Maritime Company. Mobil reassesed its situation in early 1974, reversed its field, and decided to join the Saudi venture.

    Under the Samarco arrangement, ships owned by Mobil would be "bareboat-chartered" to Samarco--that is, leased without crews or provisions. Samarco would then "time-charter" the ships back to Mobil with full crews, supplies, and fuel.

    Mobil decided that Samarco's ships should be operated by an independent management company, Atlas Maritime Company. Mobil believed that Atlas could operate the ships at less cost than Mobil 2 and that this arrangement would avoid a conflict of interest among the Samarco partners.

    Atlas was established by George Comnas in 1974. Comnas met with Tavoulareas in January 1974 and explained that he had just started his own business after leaving his position as managing director of C.M. Lemos & Co., one of the largest Greek shipping concerns. One of Comnas' assistants at Lemos was Tavoluareas' son Peter. Peter, 24 and fresh from business school, was working at his first job in the shipping business as a $14,000 per year employee. 3 Comnas informed Tavoulareas at the January meeting that he, Comnas, wanted Peter to join his new venture as a principal and

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    that Comnas would like to explore the possibility of doing business with Mobil. Tavoulareas then informed Rawleigh Warner, chairman of Mobil's board of directors, and George Birrell, chairman of Mobil's Conflicts of Interest Committee, that Peter might join Comnas in performing services for Samarco. Soon thereafter, sometime in the spring of 1974, Tavoulareas personally recruited Comnas to manage Samarco's ships through Atlas.

    In August 1974, Peter left Lemos to become an equity partner at Atlas. Ares Emmanuel, a more experienced but similarly youthful co-worker from Lemos, had also joined Atlas but was provided with a much smaller equity interest in the firm. 4 When Peter joined Atlas, Tavoulareas sent a memorandum to Paul Wolfe, executive vice-president of Mobil, stating that he "would no longer be involved with anything as to Atlas and Samarco." Record Excepts (RE) at 2440; see RE at 2339. Mobil later told the Post that "[f]rom the date Peter Tavoulareas joined Atlas, Mr. Tavoulareas divorced himself from involvement in matters involving business transactions between Mobil and/or SAMARCO with Atlas" and that "[t]his is what Mr. Warner reported to [Mobil's] Board." RE at 2344. 5 The undisputed record, however, reveals that Tavoulareas involved himself in Samarco-Atlas matters on numerous occasions after Peter joined Atlas. For example, at trial Tavoulareas admitted that he attended and participated in meetings in Geneva in August 1974 and Saudi Arabia in November 1974 at which substantive discussions took place that helped produce the final agreement between Atlas and Samarco. Tavoulareas conceded that in these meetings he was "representing George Comnas' [and hence Peter's] position," Transcript (Tr.) at 1712, urging the Saudis to accept terms sought by Atlas.

    As its inaugural project, Atlas began operating two Mobil-owned ships under contract with Samarco at an annual fee of more than $600,000, with the prospect of additional ships in the future. No other bids were solicited or received for the ship-management contract. By the time the Post published its story, Atlas had received more than $4.5 million in management fees from Samarco.

    Shortly after Atlas began operations, Mobil grew disenchanted with Comnas, although there is disagreement among Tavoulareas' witnesses about whether the dissatisfaction arose from Comnas' business performance or some alleged misconduct on his part. What is undisputed is that Tavoulareas participated in a meeting, held in Tavoulareas' office, at which senior Mobil executives decided to seek Comnas' removal from Atlas. It is also undisputed that Tavoulareas and two other Mobil shipping...

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