Bank of Oregon v. Independent News, Inc.

• Decision Date: 08 January 1985
• Citation: 298 Or. 434,693 P.2d 35
• Parties: , 11 Media L. Rep. 1313 BANK OF OREGON, a corporation, and Homer G. Wadsworth, Respondents on Review, v. INDEPENDENT NEWS, INC., a corporation, Ronald A. Buel, and Richard H. Meeker, Petitioners on Review. TC A7908-03679; CA A24067; SC S30174.
• Court: Oregon Supreme Court

Page 35

693 P.2d 35

298 Or. 434, 11 Media L. Rep. 1313

BANK OF OREGON, a corporation, and Homer G. Wadsworth Respondents on Review, v. INDEPENDENT NEWS, INC., a corporation, Ronald A. Buel, and Richard H. Meeker, Petitioners on Review.

TC A7908-03679; CA A24067; SC S30174.

Supreme Court of Oregon.

Argued and Submitted May 2, 1984.

Decided Jan. 8, 1985.

Bruce E. Smith, Eugene, argued the cause and filed the brief for petitioners on review. With him on the brief were Cass, Scott, Woods & Smith and Roger M. Saydack, Eugene.

Bernard Jolles, Portland, argued the cause and filed the briefs for respondents on review. With him on the brief was Jolles, Sokol & Bernstein, P.C., Portland.

Charles F. Hinkle, Portland, filed an amicus curiae brief on behalf of ACLU of Oregon, Inc.

Ernest Bonyhadi and Charles F. Hinkle, Portland, filed an amicus curiae brief on behalf of Statesman-Journal Co. for Stoel, Rives, Boley, Fraser & Wyse, Portland, and Clark, Marsh Lindauer, McClinton & Vollmar, Salem.

Charles F. Hinkle, Portland, filed an amicus curiae brief for Dow Jones & Co., Inc. With him on the brief were Ernest Bonyhadi and Stoel, Rives, Boley, Fraser & Wyse, Portland, Robert D. Sack, Robert P. LoBue and Patterson, Belknap, Webb & Tyler, New York City.

Jack L. Orchard, Portland, filed an amicus curiae brief for Oregon Newspaper Publishers' Ass'n. With him on the brief was Ball, Janik & Novack, Portland.

Before PETERSON, C.J., and LENT, CAMPBELL, ROBERTS, CARSON and JONES, JJ.

CAMPBELL, Justice.

The issue on review is the standard of culpability that these plaintiffs must prove in order for a court or jury to hold media defendants liable for defamation.

Plaintiffs Bank of Oregon and Wadsworth, its president, brought this libel action against defendants Independent News, Inc., publisher of the "Willamette Week," and Buel and Meeker, two reporters for the newspaper. Plaintiffs pleaded that defendants wrote and published an article which was false and defamatory with knowledge of its falsity or reckless disregard of its truth or falsity and with an actual intent to defame plaintiffs. Plaintiffs alleged damages totalling $7,400,000 as a result of the defamation. Plaintiffs requested defendants to publish a retraction of the defamatory statements in the article and defendants refused to do so.

The article was entitled "A Lot Off the Top" and dealt at some length with banking transactions involving plaintiffs and Richard Cross, the primary source of information for the article. The article as a whole indicated that plaintiffs had engaged in numerous wrongful acts to divert Cross' money and credit to another bank customer.

Plaintiffs filed a complaint on August 3, 1979. After extensive discovery, defendants moved for summary judgment on October 21, 1981. Plaintiffs moved to amend their complaint on January 29, 1982, to include an allegation that defendants had negligently published the article; that is, published it without due care to ascertain whether the article was true. The trial judge denied the motion to amend on the stated ground that negligence was not a proper standard in this case for proof of defendants' culpability in publishing the article.

The trial judge entered summary judgment for defendants, reading into the record his belief that the plaintiffs must prove gross negligence on the part of defendants to prevail, and that plaintiffs had not demonstrated sufficient facts to prove that defendants, judged by an objective standard, had engaged in reckless conduct. ¹ The Court of Appeals reversed and remanded the case. 65 Or.App. 29, 670 P.2d 616 (1983). It held that the proper standard of liability was negligence (the care of a reasonably prudent, careful and skillful journalist) and that summary judgment for defendants was error.

Although the issue raised in this case will ultimately require analysis of the Oregon and United States Constitutions, we shall first examine the Oregon common law on libel. Once the standard of liability required under Oregon caselaw is determined, we will ascertain whether that standard is consistent with the Oregon Constitution. If so, we will decide whether that standard is consistent with the federal constitution as interpreted by the Supreme Court of the United States.

The action of defamation is brought by a person who has been libelled or slandered by the utterance of another. To be actionable, the utterance must defame the person bringing the action. Three categories of affirmative defenses are available: (1) the utterance was true; (2) the utterance was absolutely privileged; or (3) the occasion of the utterance was qualifiedly privileged. The latter defense, unlike the others, does not bar the action, but requires plaintiff to prove that the defendant acted with actual malice.

At Oregon common law, lack of culpability could establish a defense to a libel action in certain circumstances. Where the qualified privilege of "fair comment and criticism" was applicable, the defendants would not be liable if the publication was made in good faith and without malice. Peck v. Coos Bay Times Pub. Co., 122 Or. 408, 259 P. 307 (1927). Peck stated that statements published in defendant's newspaper "concerning plaintiff's political activities and his alleged affiliation with the Ku Klux Klan came within the doctrine of qualified privilege * * *." 122 Or. at 422, 259 P. 307. This holding was based primarily upon the fact that plaintiff had entered the political arena, though he was not a public official or candidate. This court stated that in such a situation defendants were not liable for statements that did not attack the character, morals, or lawfulness of plaintiff unless they published the statements with actual malice. 122 Or. at 420-21, 259 P. 307. Peck also held that statements that plaintiff committed a criminal assault and that he was a "double-crosser" were not fair comment or criticism nor qualifiedly privileged and that, therefore, truth of the statements was the only defense. 122 Or. at 422, 259 P. 307. This was so even though the "double-crosser" reference was made concerning plaintiff's political activities. 122 Or. at 419, 259 P. 307.

Kilgore v. Koen, 133 Or. 1, 8, 288 P. 192 (1930), stated that a qualified privilege existed for fair and impartial reports of judicial proceedings, regardless of the nature of the proceedings or whether they were recorded. The article in Kilgore as a whole was determined as a matter of law to be such a privileged report. Thus, the burden of proving actual malice rested upon plaintiff. 133 Or. at 9, 288 P. 192. ²

The facts in Marr v. Putnam, 196 Or. 1, 246 P.2d 509 (1952), are similar to the instant facts. An article suggesting that plaintiffs were "slickers" operating a "radio racket" was published by defendants. Although defendants maintained that the article merely commented on matters of public interest and was therefore qualifiedly privileged, this court held that the publication of assertions of misconduct, not acknowledged or proved to have occurred, is not privileged under Oregon law. 196 Or. at 30-35, 246 P.2d 509. The article did not expressly allege the commission of a crime by the "slickers." Nevertheless, this court found that "[n]o matter how honest his motive" a journalist does not have a privilege to proclaim that an individual has committed a crime or to proclaim, based upon rumor, that an individual has frailties or a bad character. 196 Or. at 34-35, 246 P.2d 509.

These three cases required proof of actual malice only where the defamatory statements are qualifiedly privileged. The qualified privileges discussed do not encompass the publication of the instant article read as a whole. The article at issue contains statements that might be considered of public interest, but they are not of the type that the common law considered qualifiedly privileged. That being the case, notwithstanding the confusion regarding "malice" in common law libel actions, see supra note 2, at least some of the statements in the article, if proved false and defamatory, need not have been published with any level of culpability for the defendants to be liable for their publication. The common law would hold the instant defendants liable even if they were without fault. ³

Defendants argue that Article I, section 8 of the Oregon Constitution precludes the imposition of liability without fault for a defamatory publication. Plaintiffs disagree and allege that Article I, section 10 of the Oregon Constitution requires that a remedy be provided for injury to reputation. Article I, section 8 provides:

"No law shall be passed restraining the free expression of opinion, or restricting the right to speak, write, or print freely on any subject whatever; but every person shall be responsible for the abuse of this right."

Article I, section 10 provides:

"No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation."

A tension exists within Article I, section 8 between the right to communicate on any subject whatever and the abuse of this right. There is no basis under the Oregon Constitution to provide more protection to certain non-abusive communication based upon the content of the communication. Speech related to political issues or matters of "public concern" is constitutionally equal to speech concerning one's employment or neighbors, so long as that speech is not an abuse of the right. See State v. Robertson, 293 Or. 402, 435, 649 P.2d 569 (1982) ("The right of free expression is as important to many people in their personal and institutional relationships as it is in the narrower 'civil liberties' related to politics, and nothing in Article I, section 8, suggests that it is limited to the latter."). The Oregon Constitution does not recognize hierarchies of...