Journal-Gazette Co. v. Bandido's, Inc.

CourtSupreme Court of Indiana
Citation712 N.E.2d 446
Docket NumberNo. 57S03-9709-CV-00495.,57S03-9709-CV-00495.
PartiesJOURNAL-GAZETTE COMPANY, INC., Appellant (Defendant below), v. BANDIDO'S, INC., Appellee (Plaintiff below).
Decision Date23 June 1999

James P. Fenton, Eilbacher Scott, P.C., Cathleen M. Shrader, John D. Walda, Barrett & McNagny, Fort Wayne, Indiana, Attorneys for Appellant.

Edward L. Murphy, Jr., Diana C. Bauer, Miller Carson Boxberger & Murphy, Robert E. Connolly, O'Dowd Wyneken & Connolly Fort Wayne, Indiana, Attorneys for Appellee.


SULLIVAN, Justice.

In grappling with the right to freedom of speech provided by the First Amendment versus the right of individuals to be protected from attacks upon their reputations, the Court of Appeals determined that Bandido's failed to prove by clear and convincing evidence that the Fort Wayne Journal-Gazette newspaper published a subheadline with actual malice. While we agree with the Court of Appeals's conclusion, we write to hold that the actual malice standard of proof required in defamation cases involving matters of public or general concern applies not only to public figures, but to private individuals as well.


Bandido's is a Mexican-style restaurant with three locations in Fort Wayne Indiana, and one in Lima, Ohio. On September 13, 1988, the Allen County Board of Public Health conducted a health inspection of the north-side Bandido's in Fort Wayne. In the report, the inspector identified several violations and made the following relevant remarks: "Evidence of flies, roaches and rodents noted. Advise exterminator to do a full clean out of premise. Rodent droppings noted only in restroom." (R. at 631.) Immediately thereafter, Mr. Schindler, the owner of Bandido's, received a letter from the Fort WayneÔÇöAllen County Board of Public Health advising him of a hearing to determine whether the restaurant permit should be revoked. On October 3, the day before the hearing, another inspector visited the restaurant for the sole purpose of gathering information for the hearing. At this time, the inspector did not find any evidence of rodents. On October 4, without permitting Mr. Schindler to speak, the Board of Public Health revoked Bandido's permit and closed the restaurant. In a letter dated October 5, 1988, to Mr. Schindler, Dr. Irmscher, the Commissioner for the Board of Public Health, stated, "This permit was revoked after a full and complete hearing and review of all food inspections for 1988." (R. at 1155.)

June Remley was assigned the task of writing an article concerning the closing of Bandido's for the Fort Wayne Journal-Gazette, a daily newspaper. Once written, the story was turned over to her supervisor, Gabby Jacobs, the Assistant Metro Editor. The story was untitled and Remley never saw the story again before publication. Jacobs's job was to resolve any questions or ambiguities and generally get the story ready for publication. The story was then submitted to the news editor, Ellen Garner. Garner's role was to lay out the story for publication, do an initial edit, and make sure the story was still current. Garner also determined how much space was available for the story and for the headline. Next, the story proceeded to the copy editor, Sheila Pinkley. Pinkley's responsibility was to do a final edit of the story which required a word for word, line by line read. Pinkley's job was also to make any necessary changes to meet the spacing guidelines. Finally, Pinkley wrote the headline and the subheadline which are at issue in this case. The story with the headline was then submitted to Pinkley's supervisor, Bill Leonard. Leonard's duty was to approve everything that had been done, do a final review, make sure the layout was acceptable, and make sure the headline accurately summarized the story. The story then went to the Managing Editor, Ellen Garner.1 Garner reviewed the story and headline. Finally, the page proof editor, Tom Jones, looked for typographical errors, story and headline problems and things of that sort.

The article was published on October 6, 1998, and the headline read:2 Health board shuts doors of Bandido's Inspectors find rats, roaches at local eatery

While the story itself was accurate, the subheadline inaccurately used the word "rats." The health board never discovered rats at Bandido's and the word "rats" never appeared in the article. The next day, Mr. Schindler advised the Journal-Gazette of the mistake and asked for an immediate retraction. On October 7, 1988, the Journal-Gazette published another article in which it noted the mistake and apologized.3 The next day, Robert Wright, Bandido's attorney, wrote the Journal-Gazette and the Journal-Gazette's attorney a letter expressing his and Mr. Schindler's satisfaction with the article and the apology that appeared in the story, and his belief that the correction would hopefully reduce the damages suffered by Mr. Schindler. Shortly after this letter was written, Mr. Schindler retained a new lawyer. On October 18, 1988, Robert Connolly, Bandido's new attorney, sent the Journal-Gazette a letter indicating that the October 7, 1988, follow-up story was insufficient because the headline made no reference to a retraction. This letter requested the Journal-Gazette to print a headline retraction the same size as the original story and in the same location. The Journal-Gazette did not comply with this request and consequently Bandido's filed a defamation suit on November 21,1988.

The trial court concluded that there was no genuine issue of material fact with respect to the element of actual malice and granted summary judgment in favor of the Journal-Gazette. On appeal, the Court of Appeals determined that there were facts in dispute and conflicting inferences on the issue of actual malice, reversed the trial court's decision, and remanded for a trial on the merits. Bandido's, Inc. v. Journal-Gazette Co., 575 N.E.2d 324 (Ind.Ct.App.1991), transfer denied. At the conclusion of trial, the jury awarded Bandido's $985,000 in damages. The Journal-Gazette appealed and the Court of Appeals reversed the trial court, finding that there was not clear and convincing proof of actual malice. Journal-Gazette Co. v. Bandido's, Inc., 672 N.E.2d 969 (Ind.Ct.App. 1996).

We will provide additional facts when necessary.


Bandido's defamation suit against the Journal-Gazette implicates the First Amendment to the United States Constitution. The First Amendment secures freedom of the press.4 It "was fashioned to assure unfettered interchange of ideas for the bringing about of political and social changes desired by the people."5New York Times Co. v. Sullivan, 376 U.S. 254, 269, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964) (quoting Roth v. United States, 354 U.S. 476, 484, 77 S.Ct. 1304, 1 L.Ed.2d 1498 (1957)). There is a "national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open." Id. at 270-71, 84 S.Ct. 710. The First Amendment has particularly protected the press because it is the means through which the public is informed of government actions and other matters of public interest. However, the rights under the First Amendment are not absolute, for they must be weighed against other societal interests. For example, because society has a strong interest in protecting attacks upon individual reputation, the law of defamation was created. A defamatory communication is defined as one that "tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him."6Doe v. Methodist Hospital, 690 N.E.2d 681, 686 (Ind.1997) (quoting Restatement (Second) of Torts ž 559 (1977)); see Near East Side Community Org. v. Hair, 555 N.E.2d 1324, 1330 (Ind.Ct.App.1990)

; Cochran v. Indianapolis Newspapers, Inc., 175 Ind.App. 548, 553, 372 N.E.2d 1211, 1217 (1978).

In the process of protecting reputation, limitations have been placed on the freedom of speech. This was a result of the long standing principle that defamation was not protected speech, Chaplinsky v. New Hampshire, 315 U.S. 568, 571-72, 62 S.Ct. 766, 86 L.Ed. 1031 (1942), and could therefore be legislated by the states individually. However, the law of defamation has dramatically changed in the last few decades. In the landmark decision of New York Times, 376 U.S. at 254, 84 S.Ct. 710, the United States Supreme Court placed limits on the liability for defamation. New York Times was just the beginning of the Supreme Court's attempt to confine the state laws on defamation to conform with First Amendment privileges.

In New York Times, the Supreme Court held that the Constitution mandates "a federal rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with `actual malice'ÔÇöthat is, with knowledge that it was false or with reckless disregard of whether it was false or not." Id. at 279-80, 84 S.Ct. 710. Soon thereafter, the Supreme Court determined that the same requirement should apply to "public figures." Curtis Publ'g Co. v. Butts, 388 U.S. 130, 164, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). Several years later, in Rosenbloom v. Metromedia, the Court rejected any distinction between a public and private individual because it made "no sense in terms of the First Amendment guarantees." 403 U.S. 29, 46, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971). Instead, the Rosenbloom Court determined that the controlling issue in determining when the New York Times standard of actual malice applied was whether the issue concerned a matter of public or general concern. Rosenbloom, 403 U.S. at 52, 91 S.Ct. 1811.

Three years later, observing that there had been a "general problem of reconciling the law of defamation with the First Amendment," the Supreme Court reconsidered its decision in Rosenbloom. Gertz v. Robert Welch, Inc., 418 U.S. 323, 333, 94...

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