Vegod Corp. v. American Broadcasting Companies, Inc.

• Decision Date: 08 January 1979
• Citation: 151 Cal.Rptr. 575,88 Cal.App.3d 95
• Parties: , 4 Media L. Rep. 1990 VEGOD CORPORATION et al., Plaintiffs and Appellants, v. AMERICAN BROADCASTING COMPANIES, INC., et al., Defendants and Respondents. Civ. 42363.
• Court: California Court of Appeals Court of Appeals

Page 575

151 Cal.Rptr. 575

88 Cal.App.3d 95, 4 Media L. Rep. 1990

VEGOD CORPORATION et al., Plaintiffs and Appellants, v. AMERICAN BROADCASTING COMPANIES, INC., et al., Defendants and Respondents.

Civ. 42363.

Court of Appeal, First District, Division 1, California.

Jan. 8, 1979.

Opinion on Hearing, See 160 Cal.Rptr. 97, 603 P.2d 14.

Hoberg, Finger, Brown, Carlson, Cox & Molligan, Peter N. Molligan, James Geagan, San Francisco, for plaintiffs and appellants.

Lillick McHose & Charles, Robert Fremlin, Robert Kavanaugh, Gail Heckemeyer, San Francisco, for defendants and respondents American Broadcasting and Lund.

Tolpegin & Imai, Andre V. Tolpegin, San Francisco, for defendants and respondents Better Business Bureau, Thurber and Keefer.

ELKINGTON, Associate Justice.

Vegod Corporation and Western Institute of Retailing, Inc., commenced an action for damages for slander against American Broadcasting Companies, Inc., American Broadcasting Company KGO-TV Channel 7, Better Business Bureau of San Francisco, certain of those defendants' employees, and others. Concluding that the plaintiffs were "public figures," and upon being advised that they were unable to prove the defendants' "actual malice" within the requirement of New York Times Co. v. Sullivan (1964) 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, the superior court entered judgments in favor of the defendants. Plaintiffs thereupon appealed.

The uncontroverted facts before the superior court and reasonable inferences therefrom were as follows.

The "City of Paris" was a well-known and long-respected San Francisco department store. Its age equaled that of the State of California; its doors were first opened in 1850. Apparently drawing upon judicial knowledge (see Evid.Code, § 451, subd. (f)), the superior court described it as a "landmark store," and counsel seemed in agreement that it was a highly regarded "department store that has been in San Francisco since the Gold Rush, that is famous for its Christmas celebrations that children of every age of San Francisco had been going to for years, . . ." But the "demise" of the store, in 1972, was imminent; the news media had widely reported that it soon would go out of business.

Plaintiffs are Vegod Corporation and Western Institute of Retailing, Inc., to whom collectively and for convenience we shall hereinafter refer in the singular as Vegod. Vegod had a common management, and to a large extent, common ownership. Vegod's "main business was the 'closing out' of . . . stores" that had failed, or were otherwise going out of business. Arrangements of some kind were made with the City of Paris for Vegod to conduct a "closing out," and "total," sale of its merchandise. The sale received wide newspaper advertising of the bargains to be found in the City of Paris' merchandise inventory. In the course of the "closing out" sale, merchandise was brought into the store for sale by Vegod from as far away as Chicago. Indeed, "both plaintiffs brought in merchandise to the City of Paris from other stores, . . ." And space was rented by Vegod to concessionaires who themselves "brought in merchandise in accordance with their own merchandising practices and procedures."

An official of Better Business Bureau of San Francisco interviewed a "KGO-TV Channel 7" news reporter. He advised her, among other things, that "shoppers who visited the City of Paris were likely to find 'distress' and out-of-season merchandise instead of the high-quality clothing normally offered by the store. (He) also stated that garments bore misleading tags which made it appear that clothing offered for sale at its full retail price was discounted in price," and that the price of merchandise offered to the public might be four times the price paid by Vegod.

Thereafter, upon notice to Vegod of the intent so to do in compliance with some official regulations, the reporter, with the approval of KGO-TV Channel 7, broadcast the following news report:

"The City of Paris has always been a trusted San Francisco institution with a well-earned reputation for honesty a store can only get through many years of treating the public fairly, but the Better Business Bureau has revealed exclusively to Newscene that it is not the trusted City of Paris management that's running the close-out campaign. The watchdog agency says two outside companies, Vega (Sic ) Corporation and Western Institute of Retailers (Sic ), have been brought in to handle the close-out, a close-out the Better Business Bureau says has deceived the public that trusts the name City of Paris and promises bargains that are not really bargains at all."

That broadcast, and some others which were similar in context, were the subjects of Vegod's action.

Pretrial conferences were held between the court and counsel for the respective parties. The discussions centered around whether Vegod was a "public figure" required by law to prove "actual malice" on the part of the defendants. Vegod, as previously indicated, conceded an inability to prove such "actual malice" by "clear and convincing evidence." After appropriate argument on the issue, the here questioned judgments were entered.

New York Times Co. v. Sullivan, supra, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, in 1964 announced the rule that a "Public official " is prohibited "from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with 'actual malice' that is, with knowledge that it was false or with reckless disregard of whether it was false or not." (Pp. 279-280, 84 S.Ct. p. 726.) And, said the court, the proof of such "actual malice" must be made with "convincing clarity." (Pp. 285-286, 84 S.Ct. 710.)

Three years later the high court extended its rule to include "public figures." In Curtis Publishing Co. v. Butts (1967) 388 U.S. 130, 155, 87 S.Ct. 1975, 1991, 18 L.Ed.2d 1094, the court asserted: "We consider and would hold that a 'public figure' who is not a public official may also recover damages for a defamatory falsehood whose substance makes substantial danger to reputation apparent, on a showing of highly unreasonable conduct constituting an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers." The court carefully added: "Nothing in this opinion is meant to affect the holdings in New York Times and its progeny, . . ."

A person may attain the status of a "public figure" in either of two ways, according to Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 351, 94 S.Ct. 2997, 3013, 41 L.Ed.2d 789: "That designation may rest on either of two alternative bases. In some instances an individual may achieve such pervasive fame or notoriety that he becomes a public figure for all purposes and in all contexts. More commonly, an individual voluntarily injects himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited range of issues. In either case such persons assume special prominence in the resolution of public questions." (Emphasis added.)

It is the latter of the "two alternative bases" with which we are here concerned.

Some confusion attended the superior court proceedings of this case. The parties appear to have understood Gertz v. Robert Welch, Inc. as Necessarily requiring a "public Controversy " for the application of that authority's second alternative.

In Gertz v. Robert Welch, Inc., there happened to have been a public Controversy into which the court specifically found the plaintiff had not injected himself, and it accordingly addressed itself to the issue in what was there appropriate language. But from similar high authority it becomes manifest that the meaning is A matter of "public interest" which, of course, includes "public controversy." Thus, in Curtis Publishing Co. v. Butts, supra, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094, where there had been no controversy before the claimed defamation of a "public figure," the members of the court described the criteria as those of "public interest," and the public's "legitimate and substantial interest." (Pp. 149, 154-155, 165, 87 S.Ct. 1975.) Likewise in Time, Inc. v. Hill (1967) 385 U.S. 374, 383-387, 87 S.Ct. 534, 17 L.Ed.2d 456, the court spoke only of "public interest," and "substantial public interest," as the necessary element of New York Times Co. v. Sullivan 's First Amendment privilege.

Lesser federal courts have variously described the required element as a matter of "public interest" (Man v. Warner Bros. Inc. (S.D.N.Y.1970) 317 F.Supp. 50, 52-53; Konigsberg v. Time, Inc. (S.D.N.Y.1970) 312 F.Supp. 848, 851), "great public interest" (Dacey v. Florida Bar, Inc. (5th Cir. 1970) 427 F.2d 1292, 1295; Bon Air Hotel, Inc. v. Time, Inc. (5th Cir. 1970) 426 F.2d 858, 861), "legitimate public interest" (Bon Air Hotel, Inc. v. Time, Inc., supra, p. 861, fn. 3; Martin Marietta Corp. v. Evening Star Newspaper (D.D.C.1976) 417 F.Supp. 947, 956), "public or general concern" (Rosanova v. Playboy Enterprises, Inc. (S.D.Ga.1976) 411 F.Supp. 440, 444), or " 'in which the public has a justified and important interest' " (Cepeda v. Cowles Magazines and Broadcasting, Inc. (9th Cir. 1968) 392 F.2d 417, 419 (cert. den., 393 U.S. 840, 89 S.Ct. 117, 21 L.Ed.2d 110)), or which is "naturally entitled to public gaze and interest" (United Medical Laboratories v. Columbia Broadcasting Sys. (9th Cir. 1968) 404 F.2d 706, 712 (cert. den., 394 U.S. 921, 89 S.Ct. 1197, 22 L.Ed.2d 454)). No such authority is found which requires a "public Controversy."

We continue our consideration of Gertz v. Robert Welch, Inc.'s second basis for status as a "public figure," i. e., where the "individual voluntarily injects himself" into a matter of public interest. Such a party, while not "a public figure for all purposes" (Martin Marietta Corp. v. Evening Star Newspaper, supra, 417 F.Supp. 947, 957), is nevertheless "a public figure for a...