Bank of Oregon v. Independent News, Inc.

• Decision Date: 25 November 1983
• Docket Number: No. A,A
• Citation: 670 P.2d 616,65 Or.App. 29
• Parties: , 9 Media L. Rep. 2425 BANK OF OREGON, a corporation, and Homer G. Wadsworth, Appellants, v. INDEPENDENT NEWS, INC., a corporation, Ronald A. Buel and Richard H. Meeker, Respondents. 7908-03679; CA A24067.
• Court: Oregon Court of Appeals

Page 616

670 P.2d 616

65 Or.App. 29, 9 Media L. Rep. 2425

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

No. A 7908-03679; CA A24067.

Court of Appeals of Oregon.

Argued and Submitted July 27, 1983.

Decided Oct. 12, 1983.

Reconsideration Denied Nov. 25, 1983.

Bernard Jolles, Portland, argued the cause for appellants. With him on the briefs was Jolles, Sokol & Bernstein, P.C., Portland.

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

Charles F. Hinkle, Portland, filed a brief amicus curiae for American Civil Liberties Union of Oregon, Inc.

Jack L. Orchard, and Ball, Janik & Novack, Portland, filed a brief amicus curiae for Oregon Newspaper Publishers' Ass'n.

Before RICHARDSON, P.J., and WARREN and ROSSMAN, JJ.

RICHARDSON, Presiding Judge.

Plaintiffs in this libel action are Bank of Oregon and its president, Wadsworth. They allege that they were defamed by an article written by defendants Buel and Meeker and published in defendant Independent News, Inc.'s weekly newspaper Willamette Week. The article was based in the main on information furnished defendants by Richard Cross, a customer of the bank. A foreclosure action by the bank was pending against Cross at the time he gave the information to defendants. Defendants' article was to the general effect that plaintiffs had engaged in a series of wrongful acts to divert Cross's money and credit to another bank customer. Plaintiffs contend that defendants did not take adequate care to ascertain the truth or falsehood of Cross's charges before publishing them.

The trial court granted defendants' motion for summary judgment, and plaintiffs appeal from the resulting judgment. The principal issue is what level of culpability a plaintiff who is a "private individual" must prove against a "media defendant" to recover for libel.

The common law rule in Oregon and virtually all other jurisdictions is that defamations ascribing "to the defamed party characteristics or conduct that would adversely affect his fitness for his occupation or profession" are actionable per se. Benassi v. Georgia-Pacific, 62 Or.App. 698, 705, 662 P.2d 760, modified 63 Or.App. 672, 667 P.2d 532 (1983); see also Cook v. Safeway Stores, Inc., 266 Or. 77, 511 P.2d 375 (1973); Murphy v. Harty, 238 Or. 228, 393 P.2d 206 (1964). Accordingly, a presumption of malice and of general damage to reputation arises from the making of the defamation alone, and direct proof of culpability on the part of the defendant is unnecessary. Woolley v. Hiner, 164 Or. 161, 165, 100 P.2d 608 (1940); Peck v. Coos Bay Times Pub. Co. et al., 122 Or. 408, 259 P. 307 (1927); see Gertz v. Robert Welch, Inc., 418 U.S. 323, 346-47, 349, 94 S.Ct. 2997, 3010, 3011, 41 L.Ed.2d 789 (1974). ¹

However, a series of United States Supreme Court decisions, beginning with New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), hold that the First Amendment requires more of a showing of culpability than the common law does to support a judgment for libel against a media defendant (e.g., a publisher or broadcaster). The Court held in New York Times that a public official cannot recover

" * * * 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. * * * " 376 U.S. at 279-80, 84 S.Ct. at 726.

Although it is not wholly clear from the New York Times opinion, later statements by the Supreme Court indicate that the "reckless disregard" part of the actual malice test is a subjective rather than an objective standard. See St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968) (statement must be made with "high degree of awareness * * * of probable falsity," and defendant must have "entertained serious doubts as to the truth of his publication").

In Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967), the Court extended the actual malice standard to libel actions by "public figures" against media defendants. Four years later, a plurality of the Court concluded in Rosenbloom v. Metromedia, 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971), that the actual malice rule applies even to actions by "private individuals" (i.e., persons who are not public officials or public figures) if the subject of the defamation is one "of public or general interest." 403 U.S. at 43, 91 S.Ct. at 1819. In Gertz v. Robert Welch, Inc., supra, the Court rejected the plurality's conclusion in Rosenbloom and held

" * * * that, so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual. * * * " 418 U.S. at 347, 94 S.Ct. at 3010.

The principal rationale for New York Times is that, in the context of political debate and communication about public officials, the First Amendment requires that erroneous statements "must be protected if the freedoms of expression are to have the 'breathing space' that they 'need ... to survive.' " 376 U.S. at 271-72, 84 S.Ct. at 721 (citing N.A.A.C.P. v. Button, 371 U.S. 415, 433, 83 S.Ct. 328, 338, 9 L.Ed.2d 405 (1963)). That premise has been adhered to in the Supreme Court's later cases. The Court said in Gertz that "[t]he First Amendment requires that we protect some falsehood in order to protect speech that matters." 418 U.S. at 341, 94 S.Ct. at 3007. However, the Court concluded in Gertz that the appropriate balance between First Amendment protection of the media and the right of redress for libel differs when those defamed are private individuals rather than public officials or public figures. The Court explained:

"More important than the likelihood that private individuals will lack effective opportunities for rebuttal, there is a compelling normative consideration underlying the distinction between public and private defamation plaintiffs. An individual who decides to seek governmental office must accept certain necessary consequences of that involvement in public affairs. He runs the risk of closer public scrutiny than might otherwise be the case. And the society's interest in the officers of government is not strictly limited to the formal discharge of official duties. * * *

" * * *

" * * * [T]he communications media are entitled to act on the assumption that public officials and public figures have voluntarily exposed themselves to increased risk of injury from defamatory falsehood concerning them. No such assumption is justified with respect to a private individual. He has not accepted public office or assumed an 'influential role in ordering society.' * * * He has relinquished no part of his interest in the protection of his own good name, and consequently he has a more compelling call on the courts for redress of injury inflicted by defamatory falsehood. Thus, private individuals are not only more vulnerable to injury than public officials and public figures; they are also more deserving of recovery." 418 U.S. at 344-45, 94 S.Ct. at 3010. ² (Citation omitted.) The only First Amendment requirement relevant to this appeal is that, in a libel action by a private individual against a media defendant, the plaintiff must prove that the defendant was at least negligent in failing to ascertain whether the defamatory publication was true or false. ³ The states may establish a higher standard of liability. Plaintiffs argue that negligence is the appropriate standard; defendants argue that the New York Times actual malice standard should apply. In granting defendants' motion for summary judgment, the trial court adopted a "gross negligence" standard; as defined by the trial court, that standard is in effect the New York Times rule, modified by an objective rather than a subjective definition of "reckless disregard."

Before we turn to the principal issue, two preliminary matters must be addressed. First, defendants argue that plaintiffs are public figures and are therefore subject to the actual malice standard, regardless of whether that standard applies in libel actions by private individuals. ⁴ The trial court concluded that plaintiffs are not public figures. We agree.

In Wheeler v. Green, 286 Or. 99, 111-17, 593 P.2d 777 (1979), the Oregon Supreme Court traced the development of the public figure doctrine from Curtis Publishing Co. v. Butts, supra, through Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L.Ed.2d 154 (1976), and demonstrated that the United States Supreme Court had narrowed the public figure category substantially in the later cases. It is unnecessary to repeat that demonstration here, but we do note that the narrowing trend described in Wheeler has continued in the United States Supreme Court's and most other courts' decisions subsequent to Wheeler.

Defendants argue that the bank "has been drawn into a controversy about its operations" and that

"Plaintiff Bank contends in part that it cannot be considered a public figure because it has not 'voluntarily [injected itself] ... into a particular public controversy,' Gertz v. Robert Welch, Inc., supra, 418 U.S. at 351, 94 S.Ct. at 3013, 41 L.Ed.2d at 812. However, Plaintiffs fail to acknowledge that voluntary injection into public controversy is not the only means of attaining public figure status. Gertz also recognizes that a person may become a public figure for a limited range of issues by virtue of having been 'drawn into a particular public controversy.' Id. at 351 . * * * "

Whatever distinction the Court may have intended between an "individual voluntarily inject[ing] himself" into a controversy and his being ...