Schiavone Const. Co. v. Time, Inc.

• Decision Date: 01 October 1985
• Docket Number: Civ. A. No. 83-932.
• Citation: 619 F. Supp. 684
• Parties: SCHIAVONE CONSTRUCTION CO. and Ronald A. Schiavone, et al. Plaintiffs, v. TIME, INCORPORATED, Defendant.
• Court: U.S. District Court — District of New Jersey

619 F. Supp. 684

SCHIAVONE CONSTRUCTION CO. and Ronald A. Schiavone, et al. Plaintiffs, v. TIME, INCORPORATED, Defendant.

Civ. A. No. 83-932.

United States District Court, D. New Jersey.

October 1, 1985.

COPYRIGHT MATERIAL OMITTED

Connell, Foley & Geiser by Peter G. Banta, Newark, N.J., for plaintiffs.

Winne, Banta & Rizzi by Peter G. Banta, Hackensack, N.J., for defendant.

OPINION

SAROKIN, District Judge.

INTRODUCTION

Although summary judgment motions by the media in defamation actions are not entitled to any special enhancement, the underlying reasons for allowing such motions are particularly applicable in this type of matter. Summary judgments are designed to avoid the expense and time of trial and permit an early disposition where there are no genuine issues of material fact to be resolved. In every case such savings are a creditable goal, but in a defamation action they go far beyond the direct economies effected. Totally apart from the ultimate verdicts for libel against the media, the mere pendency and continuation of such actions must of necessity have a chilling effect upon the freedom of the press. If the threat of a libel action is causing any segment of the media to hesitate to publish knowingly false or misleading information about persons or companies, then it is serving a worthwhile function. But if it is causing hesitation by the media in those borderline situations in which the public has a right to know, then one of our most important liberties is in peril.

Possibly the giants of the industry have both the finances and the stamina to run the risk in such situations. But the independent will of smaller magazines, newspapers, television and radio stations undoubtedly bends with the spectre of a libel action looming. Even if convinced of their ultimate success on the merits, the costs of vindication may be too great for such media defendants to print or publish that which may entail any risk of a court action. If that is the result, it is a sorry state of affairs for the media, and, more important, for this country. Therefore, probably more than any other type of case, summary judgments in libel actions should be readily available and granted where appropriate. We must accept the fact that while many defamation actions are instituted in good faith with the expectation that they will be tried to conclusion, unless a satisfactory settlement is reached in the interim, many are started for strategic reasons with no real expectation of pursuing a trial on the merits. There is no more dramatic means of denying charges than the institution of a libel action, only to be abandoned later when its purpose has been served. In the meantime, the media in all of its forms is involved in spending its energy, time and money defending such actions. The sheer number and defense costs must take its ultimate toll on a free press. While recognizing the power of the media to destroy a reputation in an instant of television coverage or with a banner headline, we must also recognize the power of libel actions, even their mere threat or pendency, to destroy the press itself and with it the very foundation of our democracy.

Here, even if plaintiffs are successful in establishing liability, as they may well be, it is unlikely that they will be able to prove damages attributable to the particular falsehood alleged in view of the vast publicity given to all facets of the Donovan controversy. Indeed, those parts of the article not alleged to be defamatory are, perhaps, more damaging than that which is the subject of this suit. However, notwithstanding the court's fears regarding the effect of the mere pendency of actions such as these, binding precedent does not permit a summary disposition of the matters here presented in favor of the defendant.

This is a libel action brought by Schiavone Construction Company and Ronald A. Schiavone against Time, Inc., regarding a magazine article published in the "Nation" section of the August 23, 1982 issue of TIME magazine. The article, entitled "Jury Still Out: Donovan probe is reopened," stated that Special Prosecutor Leon Silverman had reopened his investigation of then Secretary of Labor Raymond Donovan and would be presenting fresh allegations about Donovan's conduct to grand juries in New York and elsewhere. After noting that Phase II of the inquiry would focus on charges that Donovan had met with two known mobsters near Miami in January, 1979, the article discussed the failure of the Special Prosecutor in his first probe to pursue all leads concerning the January, 1979 meeting. The article concluded:

The FBI faces some tough questioning of its own. The Senate Labor Committee is investigating the bureau's handling of Donovan's confirmation probe 18 months ago. The personal files of FBI Director William Webster, forwarded to the committee last month, reveal that the name of Schiavone appeared several times in the bureau's reports on the 1975 disappearance of former Teamster Boss Jimmy Hoffa. That detail would surely have intrigued both the Senate committee that approved Donovan's nomination in February 1981, and the special prosecutor this year. But neither learned about it until last month.

It is only this last paragraph of the article to which plaintiffs object and which has become the subject of this suit. It is uncontroverted that such paragraph refers to a memorandum in the files of FBI Director William Webster, which memorandum states, in pertinent part, that Mr. Webster advised Presidential Counsellor Edwin Meese "that a company, Chivone (PH), in which he Donovan apparently had a very substantial interest, had appeared a number of times in reports in our HOFEX case, but that none of these suggested any criminality or organized crime accusations." Aff. of John F. Neary (6/11/85), Exh. A. FACTS

In February, 1981, TIME's Chief of Correspondents, Richard Duncan, told Senior Correspondent Alexander McNeil Smith to "cover the Donovan case." T220:2-016.¹ An experienced reporter with over forty-five years of experience in the newspaper business, Smith had been with TIME since 1969. T52:2-22. From 1981 until his deposition on October 29, 1984, Smith accumulated between twenty and thirty files on Donovan. T163:5-8. Approximately twenty stories resulted from these files. T163:9-25.

In June, 1982, T107:6-15, Smith learned from three separate confidential informants of the contents of a confidential memorandum authored by FBI Director William H. Webster to then Executive Assistant Director of the FBI, Francis P. Mullen, dated December 15, 1980. Although Smith never saw the memorandum, it was read to him, T105:22-25; T106:12-25; T107:2-6; T18:5-9, and he wrote down its contents word-for-word in his notes. T91:2-4. The Webster memorandum reported December 12, 1980 conversations between Mr. Webster and Pen James and Edwin Meese, both members of the staff of then President-elect Ronald Reagan. The memorandum read as follows:

Mr. Edwin Meese called during my absence at 10:15 a.m. 12/12/80, and said he would return the call upon my return. He was tied up with President-elect Reagan and asked Mr. Pen James to return the call. Mr. James asked whether we had reached any conclusion as a result of our inquiry into Pat Donovan. I checked with Mr. Revell and based on information which he supplied, as well as my recollection of conversation with Mr. Mullen while I was in New York on December 10th, that we had reviewed all our indices and had checked with all field offices and nothing negative had been disclosed. I advised that a company, Chivone (PH), in which he apparently had a very substantial interest, had appeared a number of times in reports in our HOFEX case, but that none of these suggested any criminality or organized crime associations. I further advised that it did not appear necessary, in our view, to conduct a full field investigation based on the results of the name check. Mr. James said that he might need our assistance in the course of the confirmation proceedings and I, of course, stated that we would do whatever we could to help.

I advised that the report had been sent to Miss Jane Donower (PH), Mr. Fielding's secretary. Mr. Fielding was present with Mr. James at the time of our conversation, and was not aware that the report had been delivered.

William H. Webster

Director

Mr. Meese called at 4:40 p.m., 12/12/80, and wanted to be certain that there were no ongoing investigations involving Donovan. I confirmed to him, based on what I had been previously advised, that this was the case. We will certainly be asked for a full field following the nomination, but I told him that I knew of nothing to hold up the nomination at this time.

After hearing the contents of this memorandum, Smith understood that the FBI had concluded that the Schiavone references in the HOFEX files "did not suggest any criminality." T360:10-14. However, Smith felt that "everything Webster said in the memorandum was totally contradicted by the information that Smith had received from confidential sources." T9:2-4. Thus, while Mr. Webster stated that the FBI had reviewed all indices and checked all field offices and that nothing negative had been found, Smith's sources told him that the field offices had not been checked. T23:22-24. And while Mr. Webster had written that the FBI concluded "that none of these HOFEX references suggested any criminality or organized crime associations," Smith found such conclusion to be contradicted by other information which he had been told was in the FBI files. First, Smith was told by his confidential sources that a six-month wiretap in 1979 of William P. Masselli, undertaken as part of the FBI Tuminaro Conspiracy ("TUMCON") investigation, regarding organized crime activity and the alleged use of political influence to obtain construction contracts, see Aff. of Peter G. Banta (5/14/85), Exh. B, at 6, made reference to Schiavone Construction Co. and Donovan....