Brown & Williamson Tobacco Corp. v. Jacobson

• Decision Date: 16 November 1987
• Docket Number: 86-2475,Nos. 86-2474,s. 86-2474
• Citation: 827 F.2d 1119
• Parties: , 14 Media L. Rep. 1497 BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellee--Cross-Appellant, v. Walter JACOBSON and CBS, Inc., Defendants-Appellants--Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1119

827 F.2d 1119

56 USLW 2147, 14 Media L. Rep. 1497

BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellee--Cross-Appellant, v. Walter JACOBSON and CBS, Inc., Defendants-Appellants--Cross-Appellees.

Nos. 86-2474, 86-2475.

United States Court of Appeals, Seventh Circuit.

Argued April 3, 1987.

Decided Aug. 12, 1987.

Rehearing and Rehearing En Banc Denied Nov. 16, 1987.

Martin London, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for plaintiff-appellee/cross-appellant.

P. Cameron DeVore, Davis, Wright & Jones, Seattle, Wash., for defendants-appellants/cross-appellees.

Before BAUER, Chief Judge, WOOD and POSNER, Circuit Judges.

BAUER, Chief Judge.

This case is the sequel to Brown & Williamson v. Jacobson, 713 F.2d 262 (7th Cir.1983), in which we reinstated a libel suit that had been brought by Brown & Williamson Tobacco Corporation, which produces and markets Viceroy cigarettes, against CBS, Inc. Following our remand, the district court held a jury trial that resulted in a verdict against CBS and an award of $3,000,000 in compensatory damages and an award of $2,050,000 in punitive damages. Following post-trial motions, the district court reduced the compensatory damage award to $1.00 but upheld the punitive damage award. See Brown & Williamson v. Jacobson, 644 F.Supp. 1240 (N.D.Ill.1986). We affirm the district court's decision on liability and punitive damages but reverse its compensatory damage ruling and reinstate $1,000,000 of the $3,000,000 originally awarded by the jury.

I.

The attitude of most knowledgeable and disinterested persons toward the tobacco industry is certainly negative; at least it has been negative for the past decade. In such an atmosphere, it becomes difficult to imagine how the tobacco people can be libeled. The bashing of the industry by government and private groups has become a virtual cottage industry. This case, however, demonstrates that general bum raps against the whole tobacco industry are different from specific accusations of skulduggery by a specific company or person. And this case involves some very specific statements against a very specific company in the tobacco industry. The facts are as follows: Walter Jacobson, an employee of the CBS-owned Chicago television station WBBM-TV, has served for a number of years as the co-anchor for the 10 p.m. weekday newscasts. ¹ In addition to fulfilling his duties as an anchorman, Jacobson also delivers a nightly feature known as "Walter Jacobson's Perspective." When Jacobson delivers his Perspectives, he moves from his normal location at the anchor desk, which is located in the station's newsroom rather than in a separate studio, to a special "Perspective" section of the newsroom. During the feature, the word Perspective appears on the screen with Mr. Jacobson's signature below it. The Perspective segments are rebroadcast the following day during WBBM's early evening news broadcasts.

As part of its activities promoting the quality of its news personalities, CBS ran ads which stated that "[w]ith ten years of experience on our anchor desk, [Walter Jacobson] has established himself as the city's most savvy political reporter ... with contacts as solid as his credentials." Jacobson was touted by CBS as someone who "pulls no punches" and "lays it on the line." According to the ads, he is a journalist who will "make you angry. Or make you cheer. Walter Jacobson is liable to evoke all kinds of reactions ... and he'll always leave you informed." When he delivered his Perspective on November 11, 1981, he made the Brown & Williamson Tobacco Corporation very angry.

Jacobson's November 11 Perspective was the third in a series on the cigarette industry. The first in the series dealt with the political influence of tobacco manufacturers while the second in the series discussed the failure of cigarette manufacturers to incorporate fire prevention features into their products. The final segment in the series, which was promoted on the day of the broadcast as "[t]obacco industry hooks children ... Tonight at 10:00," dealt with the marketing practices of the cigarette industry. After Jacobson had moved to the Perspective section of the newsroom, his co-anchor, Harry Porterfield, introduced Jacobson's Perspective by stating:

For the past two nights in Perspective, Walter has been reporting on the companies that make cigarettes and the clout they carry in Washington.

Tonight he has the last in his series of special reports, a look at how the cigarette business gets its customers.

Jacobson then delivered his Perspective:

Ask the cigarette business how it gets its customers and you will be told over and over again, that it's hard these days to get customers; that the good old days are gone forever. The good old ads for cigarettes cannot be used anymore. Old St. Nick, for example, pushing Lucky Strikes because ... "Luckies are easy on my throat." The cigarette business can't count on that kind of an ad anymore. Or the doctors pushing Camels; more doctors smoke Camels than any other cigarette. The business can't count on an ad like that anymore, either.

Nor can it count anymore on television. Pushing cigarettes on television is prohibited. Television is off limits to cigarettes. And so the business (the killer business) has gone to the ad business in New York for help; to the slicksters on Madison Avenue, with a billion dollars a year for bigger and better ways to sell cigarettes.

Go for the youth of America. Go get 'em, guys. Get some young women, give them some samples. Pass them out on the streets, for free, to the teenagers of America. Hook 'em while they're young. Make 'em start now. Just think how many cigarettes they'll be smoking when they grow up.

Or, here's another cigarette-slickster idea. The Merit report wants your opinion; a survey, they say, on current events. A $270,000 Merit wagon. Walk in, children, and let us know what you think about President Reagan. Get involved, children. Thank you, on behalf of Merit cigarettes. Or another cigarette-slickster idea. Go for the children through sports. You'll never guess who's likely to be a winner at the Winter Olympics. How about Rudd Pyles, from Colorado? But better than that, how about Benson & Hedges? At-a-way. The best possible way to addict the children to poison. There are more subtle ways, as well. A scene, for example, in Superman II. A bus crashing into a truck. Could be any truck, couldn't it? But, in a movie that's being seen by millions of children who love Superman, the bus crashes into a Marlboro truck.

Jacobson then reached the portion of his Perspective that the jury and the district court found libeled Brown & Williamson:

The cigarette business insists, in fact, it will swear up and down in public, it is not selling cigarettes to children; that if children are smoking (which they are, more than ever before), it's not the fault of the cigarette business. Who knows whose fault it is, says the cigarette business.

That's what Viceroy is saying. Who knows whose fault it is that children are smoking? It's not ours. Well, there is a confidential report on cigarette advertising in the files of the federal government right now, a Viceroy advertising [sic]. The Viceroy strategy for attracting young people (starters, they are called) to smoking.

"For the young smoker a cigarette falls into the same category with wine, beer, shaving, or wearing a bra," says the Viceroy strategy. "A declaration of independence and striving for self-identity. Therefore, an attempt should be made," says Viceroy, "to present the cigarette as an initiation into the adult world, to present the cigarette as an illicit pleasure, a basic symbol of the growing-up maturity process. An attempt should be made," says the Viceroy slicksters, "to relate the cigarette to pot, wine, beer, and sex. Do not communicate health or health-related points."

That's the strategy of the cigarette-slicksters, the cigarette business which is insisting in public ... we are not selling cigarettes to children.

They're not slicksters. They're liars.

While Jacobson was making his statements about Viceroy, superimposed on the screen was a current Viceroy ad featuring two packs of Viceroy Rich Lights, a golf ball, and a part of a golf club. The relation of that particular ad to "pot, wine, beer, and sex" advertisements is not clear. Jacobson testified that the golf club ad was used only as a means of identifying the brand name for the viewer.

The "confidential report in the files of the federal government" referred to by Jacobson was a report by members of the staff of the Federal Trade Commission (FTC). The report first came to the attention of Jacobson's researcher, Michael Radutzky, in the summer of 1981 when Radutzky saw an article in a Kentucky newspaper that referred to the FTC report. Radutzky, who went on to become the producer of the 5:00 p.m. and then the 10:00 p.m. news at WBBM-TV, received copies of the pertinent pages of the FTC report from the author of the newspaper article.

The FTC report stated that documents obtained from Brown & Williamson and one of its advertising agencies, Ted Bates & Company, "set forth the development of an advertising strategy for Viceroy cigarettes designed to suppress or minimize public concern about the health effects of smoking." The report stated that the documents showed that Bates, which had the Viceroy account in 1975, requested a marketing and research firm, Marketing and Research Counselors, Inc., (MARC) to assist Bates in developing a marketable image for Viceroy cigarettes. After conducting a number of focus group interviews on the subject of smoking, MARC delivered a report, which was authored by N. Kennan, to Bates. The MARC report made recommendations on what its author thought were the important elements of a successful cigarette advertising campaign. As summarized by the FTC report, "the basic premise of the [MARC] report's...