Jennings v. Telegram-Tribune Co.

• Decision Date: 25 January 1985
• Docket Number: TELEGRAM-TRIBUNE
• Citation: 210 Cal.Rptr. 485,164 Cal.App.3d 119
• Court: California Court of Appeals Court of Appeals
• Parties: , 11 Media L. Rep. 1419 Ethan A. JENNINGS, Jr., Plaintiff and Appellant, v.COMPANY, John Marrs, George Brand, John P. Scripps, and Pete Dunan, Defendants and Respondents. G000152.

Page 485

210 Cal.Rptr. 485

164 Cal.App.3d 119, 11 Media L. Rep. 1419

Ethan A. JENNINGS, Jr., Plaintiff and Appellant, v. TELEGRAM-TRIBUNE COMPANY, John Marrs, George Brand, John P. Scripps, and Pete Dunan, Defendants and Respondents.

G000152.

Court of Appeal, Fourth District, Division 3, California.

Jan. 25, 1985.

Hearing Denied April 3, 1985.

[164 Cal.App.3d 121] Howard J. Stechel, Los Angeles, for plaintiff and appellant.

Harrison & Watson, Steven B. Davis and Robert Robinson, San Diego, for defendants and respondents.

OPINION

CROSBY, Associate Justice.

The superior court granted the motion for nonsuit of the San Luis Obispo County Telegram-Tribune and various individual defendants in a libel action and plaintiff Ethan Jennings, Jr. appeals. We find the newspaper's allegedly defamatory descriptions of Jennings' federal tax prosecution sufficiently within the "literary license" of a newspaper reporting official proceedings that the so-called "fair report" privilege of Civil Code section 47, subdivision 4 was established as a matter of law on plaintiff's evidence, and thus affirm.

I

In April 1977 Ethan A. Jennings, Jr., a long-time resident and an established architect in San Luis Obispo, was accused in district court in Los Angeles of failing to file income tax returns for the years 1970 and 1971, when he allegedly received gross income of approximately $180,000 and $256,000. On May 10, 1977, accompanied by present counsel, he pleaded no contest to the misdemeanor offenses of "willfully and knowingly" failing to file income tax returns for those two calendar years (26 U.S.C., § 7203).

The next morning, Pete Dunan, a staff writer for the Telegram-Tribune, heard a radio report and read a brief article in the Los Angeles Times concerning the tax prosecution. He contacted several sources about the plea and its consequences, but was unable to reach Jennings. That afternoon's edition of the Telegram-Tribune ran a page-one news story under his by-line, accompanied by the headline, "Prominent SLO architect convicted of tax fraud."

Dunan wrote, "San Luis Obispo architect Ethan A. Jennings Jr. faces a possible sentence of up to two years in prison and a $20,000 fine for his failure to file federal income tax returns during 1970 and 1971. [p] Jennings pleaded no contest in Los Angeles Federal Court Tuesday to charges he failed to report a total combined income during the two years of more than $436,000." The article explained the legal effect of a no contest plea and reported comments by the prosecuting attorney and an Internal Revenue Service spokesman concerning Jennings' possible sentence. It also briefly described Jennings' professional background and concluded his architect's "license [was] valid and not in jeopardy because of his tax difficulties."

On May 17, 1977, the Telegram-Tribune reiterated Jennings "pleaded no contest to income tax evasion charges in federal court last week" and reported he had subsequently been asked to resign as president of Dalessi Center Inc., a local enterprise formed to develop and construct a highly publicized building project in downtown San Luis Obispo--a project vigorously opposed by the newspaper. The article also observed, "Jennings was convicted on his plea to charges he failed to report an income of more than $436,000 during 1970 and 1971."

This was followed by a third Telegram-Tribune article two days later. There, the paper noted Jennings agreed to resign as president of Dalessi and reported, "[Dalessi] Board Chairman Althea Meissner said the board called for Jennings' resignation after he pleaded no contest in federal court last week to charges of failing to report $436,000 taxable income in 1970 and 1971."

Pursuant to Civil Code section 48a, Jennings' attorney sent a telegram to the editors and publishers of the newspaper on June 4, 1977, labeling certain portions of each article libelous and demanding a retraction. The Tribune declined.

Yet a fourth article appeared in the newspaper on June 2, 1977, after Jennings was sentenced in district court: "Ethan A. Jennings, San Luis Obispo architect, was given a one-year suspended sentence and four years probation by a Los Angeles federal court judge Tuesday for failing to file income tax returns for 1970 and 1971." ¹ The article continued, "The maximum possible sentence in Jennings' case is two years in prison and a $20,000 fine for his failure to file income [sic ] during the two years of more than $436,000." ² Jennings' demand for retraction of this article was also rejected.

Jennings filed suit two months later in the San Luis Obispo County Superior Court, alleging causes of action for libel, invasion of privacy, intentional infliction of emotional distress, injurious falsehood, interference with contractual relations, interference with prospective economic advantage, and violation of Civil Code section 1708. ³ He claimed the Telegram-Tribune's articles falsely asserted he was convicted "of the specific felonious crimes of tax fraud and tax evasion, involving over $436,000 of taxable income ..." and alleged the publications were libelous on their face, injured his career, and subjected him to ridicule and scorn. He sought to hold John P. Scripps, the principal shareholder of the Telegram-Tribune Company, personally liable as the alter ego of the newspaper corporation. In addition to Scripps, Jennings named Pete Dunan, author of the first article; John Marrs, the Telegram-Tribune's managing editor and creator of the headline for the first article; George Brand, editor of the Telegram-Tribune; and Julius Gius, editorial director of the John P. Scripps Newspapers Group, who recommended against publishing retractions of the articles. ⁴

The court determined the issue of whether John P. Scripps could be liable as the alter ego of the Telegram-Tribune Company was equitable in nature and would be tried without a jury. The court found he could not be so liable and granted Scripps' oral motion for dismissal.

A jury was then impaneled, and Jennings presented his case in chief. He offered substantial evidence that the publications had destroyed his thriving architecture practice in San Luis Obispo and forced him to move from the area entirely. In order to demonstrate he was not convicted of tax fraud or tax evasion, Jennings called an expert witness, a retired IRS attorney, who testified failure to file a timely tax return is a misdemeanor which contains no element of an intent to defraud or to evade payment of taxes. The offense may be committed by simply omitting to file a return by April 15, even though the taxpayer is in fact entitled to a refund, as Jennings testified he believed he was in the years in question--although he was apparently incorrect about at least one of them.

As to the alleged amount of unreported income, Jennings explained he was a disbursing agent for clients on several construction contracts. While his actual income was modest and appropriate amounts were withheld by his firm which did timely file returns in 1970 and 1971, his gross income was artificially inflated by the contract money which passed through his coffers.

After Jennings rested, defendants moved for nonsuit (Code Civ.Proc., § 581c). For the purpose of the motion, they conceded that Jennings was not a public figure. They noted Jennings' case went only to three phrases in the four articles: the words "tax fraud" in the first, "tax evasion" in the second, and "failing to report $436,000 taxable income" in the third. These words, they claimed, could not be read out of the context of the articles which appeared to give a complete and accurate description of Jennings' tax prosecution. The court agreed and found (1) plaintiff failed to prove the articles "were not a fair and true report of judicial proceedings;" (2) the words "tax fraud" and "tax evasion" were "not a libelous description of the charges of which plaintiff was convicted nor [were] they untrue;" and (3) there was no evidence of malice by any defendant as a matter of law. The court concluded plaintiff failed to produce any evidence to support either a verdict in his favor or an award of damages on any cause of action and granted a nonsuit. Jennings' motion for new trial was denied.

On appeal Jennings claims he established a prima facie case of libel and malice by the defendants and the court erred in excluding certain evidence in his favor and in denying his motion for new trial. He also argues he was entitled to a jury trial on the alter ego issue. His position can be summarized as follows: (1) A report describing a conviction of a crime is libelous per se in this state, and he was never accused or convicted of tax fraud or tax evasion. (2) His net income in the two taxable years in question never approached $436,000; consequently, he did not, as the newspaper stated, fail to report $436,000 in taxable income.

II

California does not hold the press to the precision in reporting that Jennings suggests should prevail, although our Supreme Court specifically adopted the notion of literary license but recently: "The language of New York Times [Co. v. Sullivan (1964) 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686] itself clearly implies that all publications must necessarily be permitted some degree of flexibility in their choice of the proper words and phrases to describe the subject at issue: '(E)rroneous statement is inevitable in free debate, and ... must be protected if the freedoms of expression are to have the "breathing space" that they "need ... to survive." ' (New York Times, supra, 376 U.S. at pp. 271-272 , citation omitted.) Further, the United States Supreme Court has reaffirmed this concept in several more recent decisions. 'Realistically, ... some error is inevitable ....' (Herbert v. Lando (1979) 441 U.S. 153, 171-172 [99 S.Ct. 1635, 1646-1647, 60 L.Ed.2d 115].)" (Reader's Digest Assn. v. Superior Court (1984) 37 Cal.3d 244, 261, 208 Cal.Rptr. 137, 690...