Opposition Brief — CBS Inc. v. Brown & Williamson Tobacco Corp.

Supreme Court brief1988

Ask Donna

What actually matters in this document.

Text

No. 87-1354

IN THE

Supreme Court of the United St tee

OCTOBER TERM, 1987

CBS INC., a New York Corporation,

and WALTER JACOBSON,

Petitioners,

—_—V.—

BROWN & WILLIAMSON TOBACCO CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

BRIEF IN OPPOSITION

MARTIN LONDON

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Counsel of Record for

Respondent

Of Counsel:

Lewis R. Clayton

Alisa D. Shudofsky

Clyde Allison

PAUL, WEISS, RIFKIND, WHARTON

& GARRISON

David L. Schiavone

WILDMAN, HARROLD, ALLEN & DIXON

One IBM Plaza—Suite 3000

Chicago, Illinois 60611

(312) 222-0400 ©

QUESTIONS PRESENTED

1. Should a libel defendant be immune from presumed and

punitive damages for false statements made with knowledge of

falsity or reckless disregard of the truth, and with express mal-

ice toward the plaintiff, merely because the plaintiff is a ‘‘pub-

lic figure’’ and the statements allegedly involved a matter of

**public concern’’?

2. Is there any reason to disturb an award of compensatory

and punitive damages confirmed after de novo review by the

Court of Appéals, where: (a) petitioners p’iblished to a total au-

dience of 4.6 million people the false charge that respondent

was using an immoral advertising strategy employing ‘“‘pot,

wine, beer and sex’’ to ‘‘hook’’ children on cigarettes; (b) peti-

tioners acted with actual, as well as express, malice; and (c)

there was substantial direct and circumstantial evidence of ac-

tual injury to respondent’s reputation?

3. Should this Court examine the consistent findings of the

jury, the District Court and the unanimous Court of Appeals—

which reviewed the evidence without deference to the verdict—

that petitioners acted with actual malice, where: (a) petitioners

admitted they knew the charges in their broadcast were false;

(b) petitioners’ investigation showed the broadcast was false;

and (c) petitioners destroyed selected portions of key docu-

ments during the litigation and testified falsely at trial concern-

ing destruction of the documents?

LIST OF PARTIES AND RULE 28.1 LIST

The parties are listed in the petition. Respondent Brown &

Williamson Tobacco Corporation, a Delaware corporation, is

wholly-owned by BATUS, Inc. of Louisville, Kentucky; BA-

TUS, Inc. is wholly-owned by B.A.T. Industries, plc of the

United Kingdom, a publicly-traded corporation.

iil

TABLE OF CONTENTS

SEPT ET SO CET ETE PE TET Tee

List of Parties and Rule 28.1 List....................

ee a ad cs keene eb een buues

al wan eee bee eae nes

EE Te ee

BR EE an

The Broadcast ........ pee ehh eee ee aes

EEE OPTI TT PETE ECO TT

ES SS a

IE IY nian since ssencssnseseues P

ee eS reer

I. The Damage Awards Raise No Issue That Merits

IR a RS ee eee

A. The Award of Compensatory Damages is

B. The Punitive Damages Awards Are Fully

C. The Damage Award Presents No Eighth or

Il. The Jury and Two Lower Courts Each Correctly

Fully Supported in Fact and in Law.......

ee IERIE pO cage

Fourteenth Amendment Issue ............

Os 2) os ae ee we

Conclusion

cea ee ane Ghee eG ERAT Eee eens ace eceoesnedceaaenen. ed @

PAGE

TABLE OF AUTHORITIES

Cases PAGE

Aetna Life Insurance Co. v. Lavoie, 475 U.S. 813 (1986) 20n

American Society of Mechanical Engineers v. Hydrolevel

Cs ee es ONE aw ke ke dulecdaudsedveces 22n

Appleyard v. Transamerican Press, Inc., 539 F.2d 1026

(4th Cir. 1976), cert. denied, 429 U.S. 1041 (1977)...14, 19

Banker’s Life & Casualty Co. v. Crenshaw, No. 85-1765

(oral argument Nov. 30, 1987) .................... 20n

Bose Corp. v. Consumers Union of United States, Inc.,

SEs, eS 6 2 bo snc pose a se wadenan bondeies 10

Brown & Williamson Tobacco Corp. v. Jacobson, 713

For fi Be A | ore rr er ere 9, 19

Brown & Williamson Tobacco Corp. v. Jacobson, 644 F.

Supp. 1240 (N.D. Ill. 1986), aff'd in part, rev’d in

pert, Git Fae FANS C7 Cit. TSG) 6 5 cnc ccc ccnawes passim

Buckley v. Littell, 539 F.2d 882 (2d Cir. 1976), cert. de-

SO, ee See PU FEES vk kk sobs anensceccesas ss 19

Calder v. Jones, 465 U.S. 783 (1984)................. 12n

Carson v. Allied News Co., 529 F.2d 206 (7th Cir.

Connaughton v. Harte Hanks Communications, Inc.,

F.2d ____, 14 Media L. Rep. (BNA) 2209 (6th

Cars St WIE 0s bd CHa ee beauties MaleeGNa eee 10

Curtis Publishing Co. v. Butts, 388 U.S. 130

Et oak Sod p aad dae ki Mae hek heen 11, 13, 18

PAGE

Davis v. Schuchat, 510 F.2d 731 (D.C. Cir. 1975) ..... 18, 19

Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472

CS. FR Eee icv de viveascsrerds whacned beeen passim

Fopay v. Noveroske, 31 Ill. App. 3d. 182, 334 N.E.2d 79

CT SG. Fre vad hive bas dussinesesbeenasna 18

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) ..... passim

Gertz v. Robert Welch, Inc., 680 F.2d 527 (7th Cir.

1982), cert. denied, 459 U.S. 1226 (1983) ........... 15

Goldwater v. Ginzburg, 414 F.2d 324 (2d Cir. 1969), cert.

denied, 396 U.S. 1068 (IGT) « 6. inc cece cwcccasscecs 19

Herbert v. Lando, 441 U.S. 153 (1979).............. 12, 12n

Hustler Magazine, Inc. v. Falwell, 56 U.S.L.W. 4180

URS, SS Serr rer er eer rey 1, 12, 13, 14

Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984). 12n

Maheu v. Hughes Tool Co., 569 F.2d 459 (9th Cir. 1977) 19

Memphis Community School District v. Stachura, 477

U.S. ZS, OG B. 42. Zeer CRs ks cb ace vieeevaseas 15

New York Times Co. v. Sullivan, 376 U.S. 254 (1964) .passim

Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo. 1984)

Gre DANE oh. die eke en 8h ee 20n

Price v. Viking Press, Inc., 625 F. Supp. 641 (D. Minn.

Rice v. Sioux City Memorial Park Cemetery, Inc., 349

ae te T.nu i ey air)” 12

Time, Inc. v. Pape, 401 U.S. 279 (1971).............. 21

Other Authorities PAGE

R. Bezanson, G. Cranberg and J. Soloski, Libel Law and

The Press: Myth and Reality (1987)................ 14

Restatement (Second) of Agency (1958)

G SEOGED 0s vannnsscatbeesaetertion ie 22n

G SSUES cc dunchosccuedesescvedusean Watackeana 22n

R. Sack, Libel, Slander, and Related Problems (1980). . 15

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-1354

CBS INC., a New York Corporation,

and WALTER JACOBSON,

Petitioners,

—

BROWN & WILLIAMSON TOBACCO CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

BRIEF IN OPPOSITION

Preliminary Statement

Petitioners ask this Court to create a new constitutional im-

munity for what is perhaps the least deserving category of

speech—falsehoods published with both actual and express

malice. The petition raises no legitimate constitutional issue,

unless this Court is prepared to replace New York Times Co. v.

Sullivan, 376 U.S. 254 (1964)—a case reaffirmed last month in

Hustler Magazine, Inc. v. Falwell, 56 U.S.L.W. 4180 (U.S.

Feb. 24, 1988)—with a near-absolute privilege to defame public

figures. Neither this Court nor any Court of Appeals has ever

endorsed petitioners’ radical view. Such a policy, while no

doubt in the economic interest of publishers, would prejudice

every public figure, small and great. It would, in the end, dis-

serve everyone—except those who own printing presses.

In this case, the New York Times rule was applied by a jury, a

District Court and a unanimous Court of Appeals with meticu-

lous care over five years of litigation. The Seventh Circuit panel

reviewed—de novo and without deference to the verdict—every

element of respondent's proof, from falsity to damages. What

it found was truly a record of press abuse. In a ‘‘special report’’

broadcast four times on Chicago’s then-leading news station,

petitioners falsely announced to a television audience of 2.5

million that respondent Brown & Williamson Tobacco Corpo-

ration was running an immoral advertising campaign using

‘“*pot, wine, beer and sex’’ to ‘‘hook’’ children on cigarettes—

themes consciously designed to shock the audience, injure

Brown & Williamson, and increase CBS's Nielsens during the

national ratings ‘‘sweeps’’ then in progress.

After suit was brought, petitioners clumsily destroyed evi-

dence of their misconduct—destroying only the incriminating

portions of key documents—and lied about their conduct on

the stand. After a close review of the record, the Court of Ap-

peals pointedly noted that the CBS broadcaster ‘‘did not accu-

rately testify about his state of mind at the time of the

broadcast.’ (App. 35a-36a) As for the explanation of petition-

ers’ researcher concerning the destroyed evidence, the Court

concluded ‘‘that even a cursory review of his story reveals that

the jury was justified in finding that it was a complete fabrica-

tion.”* (App. 30a; emphasis added) ?

Petitioners erroneously portray this as a test case, posing the

question whether presumed and punitive damages are available

without proof of ‘‘actual injury.’’ But the courts below never

addressed that question, because Brown & Williamson pre-

sented direct evidence of reputational injury within the meaning

of Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). Petition-

ers’ suggestion that no actual injury was caused by a libel of this

character, communicated to millions of people, is fatuous.

Petitioners are as far from the mark when they seek review of

the actual malice issue. The record is replete with evidence of

knowing and reckless conduct. After the painstaking work of

two courts below, there is no reason for this Court to spend its

time triple-checking the verdict.

This case creates no precedent on damages, actual malice or

any other question. Petitioners have identified no confusion or

debate among the Courts of Appeals that requires intervention

by this Court, and they have failed to show why the States

should be prohibited from applying their laws where the press

broadcasts false statements with malice. In a November 29,

1985 editorial following the liability trial in this case, the Chi-

cago Sun-Times—surely not a rabid press critic—wrote that

‘*the Jacobson verdict stakes out no new legal ground. The ver-

dict erodes not one whit of our constitutional freedom.’’ The

American press, said the Sun-Times, ‘‘does not enjoy, nor

should it enjoy, the freedom to be intentionally (or recklessly)

inaccurate.”’

Petitioners (and the other influential media organizations

who wish to file an amicus brief) seek, for their own selfish

ends, to draw a constitutional cloak over intentional press mis-

conduct. Even in cases of malicious falsehood, petitioners

would deprive libel victims of damages rules which, this Court

has recognized, are necessary to compensate for the inherent

difficulty of proving reputational injury. Dun & Bradstreet,

Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 760-61 (1985).

Lacking an effective remedy for defamation, anyone within the

increasingly elastic class of ‘‘public figures’’ would be a de-

fenseless target for press abuse. This Court has never placed so

trifling a value on reputation. We respectfully submit that the

petition should be denied.

COUNTERSTATEMENT OF THE CASE

Summing up its de novo review of the record, a unanimous

panel of the Court of Appeals wrote:

{I]t is unfortunate that we are forced to conclude that this

case does not involve freedom of the press. Rather, it is

one in which there is clear and convincing evidence that a

local television journalist acted with actual malice when he

eee

made false statements about Brown & Williamson To-

bacco Corporation. Because false statements of fact made

with actual malice are not protected by the First Amend-

ment, this court is required to affirm the district court’s

finding that Jacobson and CBS libeled Brown & William-

son.

(App. 49a)

The Broadcast

In November 1981 and March 1982, petitioners broadcast

four times, to a television audience of 2.5 million in the Chicago

area, a ‘‘special report’’ on the cigarette industry containing a

malicious libel directed at Brown & Williamson. In 1984, the li-

bel was republished in an issue of the Saturday Evening Post

seen by 2.1 million readers. (App. 39a) As the Court of Appeals

found in its 1983 opinion holding the broadcast libelous per se,

‘*Tajccusing a cigarette company of what many people consider

the immoral strategy of enticing children to smoke—enticing

them by advertising that employs themes exploitive of adoles-

cent vulnerability—is likely to harm the company.’’ (App. 63a)

The Court’s view was borne out by Brown & Williamson’s

proof at trial, including direct evidence of reputational injury.

Although petitioners now label it ‘‘commentary,’’ the broad-

cast was promoted and delivered as an investigative news re-

port. The last in a three-part series concerning the tobacco

industry, the libelous broadcast focused on the alleged efforts

of cigarette manufacturers to advertise to young people. CBS

promoted it with teaser ads declaring: ‘‘Tobacco Industry

Hooks Children . . . Tonight at 10:00.’ When the report was

broadcast, news reader Harry Porterfield introduced petitioner

Walter Jacobson, CBS’s co-anchorman, as follows: ‘‘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 cus-

tomers.’’ (App. 129a; emphasis added)

The camera turned to Jacobson, who reported that the to-

bacco industry had been spending ‘‘a billion dollars a year for

bigger and better ways to sell cigarettes’ to the ‘‘youth of

America.’’ (App. 129a) He discussed several specific examples

of cigarette advertising, including film clips and pictures of ac-

tual ads. Jacobson then capped the broadcast with a detailed

description of an advertising campaign allegedly being used by

Brown & Williamson’s Viceroy brand:

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.

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 initia-

tion into the adult world, to present the cigarette as an il-

licit pleasure, a basic symbol of the growing-up maturity

process. An attempt should be made,’’ says [sic] the Vice-

roy slicksters, ‘‘to relate the cigarette to pot, wine, beer,

sex. Do not communicate health or health-related points.”’

That’s the strategy of the cigarette-slicksters, the ciga-

rette business which is insisting in public. . . We are not

selling cigarettes to children.

They’re not slicksters. They’re liars.

(App. 130a-31a)

The Trial Evidence

At trial, CBS counsel opened to the jury by promising that

petitioners would prove the truth of Jacobson’s statements

about Viceroy advertising—that Viceroy had really published

‘*not, wine, beer and sex’’ ads. That defense collapsed in the

middle of trial under the weight of evidence to the contrary.

CBS switched to the new theory that Jacobson never actually

accused Brown & Williamson of anything in the broadcast, that

he was merely providing a vague ‘‘commentary”’ about ciga-

rettes and youth. Thus, the petition filed in this Court claims

that the broadcast ‘‘was not intended to describe current Vice-

roy advertising, but was intended to support [petitioners’] opin-

ion that cigarette marketing reflects a conscious strategy to

appeal to young people. . .”’ (Pet. at 7)

As the jury and two courts below found, this interpretation of

the broadcast is pure sophistry. The broadcast ‘‘supported’’

petitioners’ alleged opinions by making the specific charge that

Brown & Williamson was running actual ads. This ‘‘commen-

tary’ detailed a series of actual advertising plans, featuring the

falsehoods about Viceroy. Jacobson asserted specifically that

Viceroy was inducing young people to smoke. The courts below

found that the ‘‘entire broadcast dealt with methods actually

used by the cigarette industry to entice children to smok-

ing. . .’’ (App. 35a; emphasis in original) ‘‘Only advertising

that children see can persuade them of anything. . .’’ (/d.) Ja-

cobson ‘‘stated that the cigarette companies were liars because

they were in fact selling cigarettes to children. And the clear

message is that Viceroy was doing this through the use of its ad-

vertising that relates the cigarette to pot, wine, beer, and sex.”’

(/d.) The District Court and Court of Appeals agreed it was

‘*incredible’’ that Jacobson conveyed this message ‘‘inadver-

tently.’” (App. 35a)

This is not a case in which petitioners could have believed, in

good faith, in an innocent interpretation of the libel. Indeed,

the Court of Appeals noted that Jacobson ‘‘did not accurately

testify about his state of mind at the time of the broadcast.”’

(App. 35a-36a)

lil

Petitioners’ mid-trial re-interpretation of the broadcast coin-

cided neatly with the failure of their case on falsity and actual

malice. Brown & Williamson put before the jury every Viceroy

ad published over a six-year period. Petitioners’ witnesses did

find evocations of sex and drugs in those ads, but the testimony

was so far-fetched that the gallery laughed and petitioners re-

versed their trial strategy. The testimony showed, moreover,

that petitioners knew before they went on the air that there were

no ‘‘pot, wine, beer and sex’’ ads. The FTC Staff Report on

which the broadcast purportedly relied said nothing about ac-

tual ‘“‘pot, wine, beer and sex’’ ads. (App. 24a) Although peti-

tioners stress the newspaper articles and other materials

gathered in their pre-broadcast ‘‘investigation,’’ none of those

documents indicated that Brown & Williamson had run a single

offending ad.

Before it aired the broadcast, CBS knew that the ‘‘pot, wine,

beer and sex’’ ‘‘campaign’’ was no more than language lifted

out of context from a report prepared in 1975—six years before

the broadcast—by a consultant hired by Brown & Williamson’s

advertising agency. Petitioners conceded they were told une-

quivocally by a Brown & Williamson representative that the

company had immediately rejected the consultant’s suggestion,

never published or commissioned any ads based upon it, and

fired the advertising agency. Jacobson’s assistant Michael Ra-

dutzky, who performed all the ‘‘research’’ for the broadcast,

testified that he looked at ‘‘zillions’’ of ads to find an example

of the alleged strategy. His search turned up nothing. But for

Jacobson—a broadcaster who, CBS advertises, ‘‘pulls no

punches’’ and ‘‘will make you angry’’—the ‘‘pot, wine, beer

and sex’’ theme was too inviting to pass up. Because no exam-

ples of the offending ads could be found, petitioners illustrated

the broadcast with Brown & Williamson ads showing two packs

of Viceroys alongside a golf club and ball. As Judge Posner put

it in the Seventh Circuit’s 1983 opinion, ‘‘the connection

between golf and a strategy of enticing children is obscure.”’

(App. 69a)!

At trial, Jacobson eventually conceded the issue of actual

malice, when he admitted on the stand that he never believed

that Brown & Williamson had run any ‘‘pot, wine, beer and

sex’’ ads. (App. 33a-35a) In the face of overwhelming evidence,

Jacobson could hardly do otherwise. As CBS counsel finally

admitted in closing argument, the idea that Brown & William-

son had actually published such ads was ‘‘ridiculous.”’

Destruction of Evidence

Just as irresponsible as petitioners’ false broadcast was their

conduct during the litigation. After suit was brought, petition-

ers selectively destroyed crucial evidence, and then gave per-

jured testimony attempting to explain how key portions of

documents had ‘‘disappeared.’’ CBS researcher Radutzky ad-

mitted that, after this case was filed, he destroyed the vast bulk

of his file—including all the notes of his ‘‘investigation,’’ por-

tions of the FTC Staff Report that was a critical source for the

broadcast, and portions of a sample broadcast script. Radutzky

testified that he made extensive handwritten notes on his copy

of the Staff Report, but the annotated pages of the Report con-

cerning Viceroy were missing. Similarly, of the 18 original

pages of the sample script, only three were produced, none

dealing with Viceroy. The Court of Appeals found that, ‘‘[aJs

‘luck’ would have it,’’ Radutzky ‘‘only destroyed the parts of

| It is no coincidence that the broadcast was aired during a ‘‘sweeps’’

period—one of three months each year when national ratings services

measure the viewership of each American television station. The pres-

sure to increase sweeps ratings is enormous, because those ratings are a

key determinant of advertising rates. Internal CBS documents show

that it has a policy of broadcasting sweeps ‘‘news’’ stories that are

‘‘aggressive,’’ ‘“‘good dirt/confrontation/sexy/exciting.’’ In addition

to the tobacco series at issue here, CBS sweeps news features—known

as ‘‘topicals’’—have included ‘*Teenage Sex,’’ ‘‘Parent Beating,’’ and

‘*Cancer Cures.”’

the documents that would have been relevant to this litigation.”’

(App. 29a)

Radutzky’s ‘‘explanation’’ of this chain of coincidences was,

according to the Seventh Circuit, ‘‘complete fabrication.”’

(App. 30a) Radutzky claimed he destroyed the documents as

part of a general housecleaning. But, the Court noted, ‘‘[n]o-

body cleans house as selectively as Radutzky did.’’ (App. 31a)

Nor could Radutzky explain why his ‘‘housecleaning’’ extended

to Jacobson’s desk as well as his own, or why Radutzky was

‘*cleaning’’ Jacobson’s workspace after he had left his job in

that section of the newsroom to take on another position at

CBS. (App. 31a) The Court added that Radutzky’s claim that

he thought the case had been terminated was not credible, com-

ing from a veteran journalist who majored in history in college,

and worked ‘ ‘constantly’ on stories involving legal matters.’’

(App. 30a)

The Seventh Circuit determined that ‘‘the evidence over-

whelmingly supports an inference that Radutzky destroyed the

documents in bad faith.’’ (App. 32a)

The Decisions Below

Brown & Williamson filed suit on March 16, 1982. Four

months later, in a two-paragraph opinion, the District Court

granted petitioners’ motion to dismiss ‘‘for the reasons set forth

in [petitioners’] memoranda.’”’ (App. 125a) That summary dis-

position was reversed in 1983 by the Court of Appeals. 713 F.2d

262 (7th Cir. 1983) (App. 55a). The unanimous panel held that

the broadcast was ‘‘libel per se in the traditional sense.’’ (App.

60a, 63a) Noting several respects in which the broadcast devi-

ated from the FTC Staff Report, the Court also held that the

jury could find the broadcast was not a ‘‘fair summary’’ of the

Report. (App. 27a-28a)

In November and December 1985, a bifurcated trial was held

in the United States District Court for the Northern District of

Illinois. After two weeks of testimony, a jury of eight returned

a four-part special verdict finding that Brown & Williamson

had proved every element of its libel claim, and that the broad-

cast was not a fair summary of the Staff Report. The jury then

heard a week-long damages case. Brown & Williamson pre-

sented the testimony of five witnesses who demonstrated that

the broadcast had damaged the company’s reputation among

customers, suppliers—and even its own employees—in the Chi-

cago area and beyond. The jury returned a verdict of $3 million

compensatory damages against both petitioners, $2 million pu-

nitive damages against CBS and $50,000 punitive damages

against Jacobson. In awarding punitive damages, the jury

found that petitioners had acted with common-law express mal-

ice, as well as New York Times actual malice.

On petitioners’ post-trial motions, the District Court inde-

pendently reviewed the record and affirmed each of the jury’s

findings on liability. 644 F. Supp. 1240 (N.D. Ill. 1986) (App.

77a). It upheld the punitive damages awards, but struck all but

$1 of the compensatory damages verdict, because Brown & Wil-

liamson had failed to show pecuniary damages—lost sales or

profits. (App. 114a-15a) On appeal, the Seventh Circuit care-

fully studied the entire record in detail. 827 F.2d 1119 (7th Cir.

1987) (App. la). It conducted a de novo review of the evidence

on all issues, giving essentially ‘‘no deference’’ to the jury’s

findings. (App. 17a) It thus went beyond the appellate review

standards prescribed by this Court in Bose Corp. v. Consumers

Union of United States, Inc., 466 U.S. 485 (1984). See Con-

naughton v. Harte Hanks Communications, Inc., F.2d

____, 14 Media L. Rep. (BNA) 2209, 2222 (6th Cir., Jan. 28,

1988) (Bose de novo review extends only to the ‘‘ultimate con-

clusion’’ of actual malice, not to subsidiary credibility determi-

nations, and not to issues other than actual malice).

In a detailed opinion, the Court of Appeals held that the re-

cord fully supported liability and the punitive damages awards.

It reversed the District Court’s decision to strike the compensa-

tory damages award, finding that the lower court erroneously

required Brown & Williamson to prove pecuniary, as opposed

to reputational, injury. (App. 41a) As this Court held in Gertz

v. Robert Welch, Inc., 418 U.S. 323, 350 (1974), a defamation

plaintiff is not limited to ‘‘out-of-pocket loss,’’ but may also re-

cover for ‘‘impairment of reputation and standing in the com-

munity,’’ even without ‘‘evidence which assigns an actual dollar

value to the injury.’’ After examining at length the evidence of

actual injury, the Court of Appeals fixed compensatory dam-

ages at $1 million—a modest sum given the viciousness of the

libel and its circulation to 4.6 million persons. (App. 39a, 46a-

47a)

REASONS FOR DENYING THE WRIT

1. The awards of compensatory and punitive damages are

fully supported by the record. Petitioners’ contention that no

‘actual injury’’ was proven ignores the extensive evidence pre-

sented below, and incorrectly equates reputational injury with

pecuniary damages. Publication of petitioners’ lurid charges to

a total of 4.6 million people caused Brown & Williamson grave

injury. The award of punitive damages—equal to .0013 of

CBS’s net worth and less than .01 of Jacobson’s—was sup-

ported by findings of both actual and express malice, and richly

justified by petitioners’ outrageous conduct.

2. Petitioners’ attacks on the constitutionality of presumed

and punitive damages where actual malice is shown are base-

less. In Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc. , 472

U.S. 749, 760 (1985), this Court endorsed presumed damages in

view of the ‘‘experience and judgment of history’’ that specific

proof is difficult even where ‘‘it is all but certain that serious

harm has resulted in fact.’’ And Curtis Publishing Co. v. Butts,

388 U.S. 130, 160 (1967), squarely rejected the argument

pressed by petitioners that the media should be exempted from

punitive damages in a public figure case concerning speech of

public concern. Petitioners have failed to identify a single rele-

vant decision adopting their views, much less an active contro-

versy among the Courts of Appeals.

2 ‘The courts below also rejected without hesitation petitioners’ argu-

ment that the broadcast was protected ‘‘opinion.’’ As shown above,

the broadcast leveled specific factual charges at Brown & Williamson.

3. Petitioners’ willful disregard of the facts learned in their

‘‘investigation’’ and their egregious misconduct amply justify—

indeed, compel—a finding of actual malice. There is no legiti-

mate reason for this Court to add a new level of review to the

unanimous conclusions of eight jurors and four federal judges.

This case presents no ‘‘special and important reasons beyond

the academic or the episodic’’ to merit certiorari. Rice v. Sioux

City Memorial Park Cemetery, Inc., 349 U.S. 70, 74 (1955).

THE DAMAGE AWARDS RAISE NO ISSUE

THAT MERITS REVIEW

‘*False statements of fact are particularly valueless; they in-

terfere with the truth-seeking function of the marketplace of

ideas, and they cause damage to an individual’s reputation that

cannot easily be repaired by counterspeech, however persuasive

or effective.’’ Hustler Magazine, Inc. v. Falwell, 56 U.S.L.W.

4180, 4181 (U.S. Feb. 24, 1988). This case involves the lowest

rung in the hierarchy of speech—statements determined to be

false, and made with actual and express malice. In seeking con-

stitutional protection for their misconduct, petitioners ignore

the caution of Herbert v. Lando, 441 U.S. 153, 172 (1979):

‘*‘Those who publish defamatory falsehoods with the requisite

culpability, however, are subject to liability, the aim being not

only to compensate for injury but also to deter the publication

of unprotected material threatening injury to individual reputa-

tion.’’ This Court has consistently rejected attempts to expand

New York Times into an absolute shield for the press.’ Indeed,

3 For example, the Court has time and again held that First Amend-

ment interests do not justify heightened procedural protections for li-

bel defendants. Calder v. Jones, 465 U.S. 783, 790-91 (1984) (no

special jurisdictional rules); Keeton v. Hustler Magazine, Inc., 465

U.S. 770, 780 n. 12 (1984) (‘‘[W]e reject categorically the suggestion

that invisible radiations from the First Amendment may defeat juris-

diction otherwise proper under the Due Process Clause.’’); Herbert v.

Lando, 441 U.S. 153 (1979) (no First Amendment privilege bars in-

quiry into editorial process).

some members of the Court have asserted that the prohibitive

actual malice standard trenches upon the compelling ‘‘interest

of those who have been defamed in vindicating their reputa-

tion.”’ Dun & Bradstreet, 472 U.S. at 767 (White, J., concur-

ring).

Brown & Williamson was required by the courts below to

meet all the strict requisites of New York Times and Gertz v.

Robert Welch, Inc., 418 U.S. 323 (1974). Indeed, the District

Court went beyond those precedents by instructing the jury that

punitive damages could be awarded only on a finding of ex-

press, common-law malice, in addition to New York Times ac-

tual malice. Once it is established that a publication is

false—‘‘there is no constitutional value in false statements of

fact,’’ Gertz, 418 U.S. at 340—and uttered with actual malice,

the press forfeits any claim to constitutional protection. The

Court held in Curtis Publishing Co. v. Butts, 388 U.S. 130, 152-

53 (1967) that:

[N]either the interests of the publisher nor those of society

necessarily preclude a damage award based on improper

conduct which creates a false publication. It is the conduct

element, therefore, on which we must principally focus if

we are successfully to resolve the antithesis between civil li-

bel actions and the freedom of speech and press.

Seven years after Curtis, in Gertz, this Court crafted the rule

that presumed and punitive damages are not recoverable unless

actual malice is proven. 418 U.S. at 349. Every Court of Ap-

peals to pass on the question has interpreted Gertz to mean

that, when actual malice is shown, the normal damage rules of

libel law apply without restriction. (See infra at 15, 19) Just a

few weeks ago, this Court stressed that New York Times and its

progeny do not ‘‘mean that any speech about a public figure is

immune from sanction in the form of damages.’’ Hustler Mag-

azine, Inc., 56 U.S.L.W. at 4181 (emphasis in original).

Petitioners’ suggestion that actual malice is an unsuitable test

for enhanced libel damages is nothing less than a frontal assault

on New York Times, Gertz and a host of other cases. For 24

i iia

years, this Court has relied on the concept of actual malice to

mark the boundary of federal intrusion into state libel law.

And, with Hustler, the Court has put actual malice into service

to limit the reach of the tort of intentional infliction of emo-

tional distress. Petitioners are wrong in their assertion that the

States have no interest in permitting damages in excess of ‘‘ac-

tual injury’’ against irresponsible press defendants. To the con-

trary, the damage limitations of Gertz do not apply where

actual malice is proven, ‘‘for where such malice is present there

is no good-faith attempt to point out real abuses to the public.

There is only an unsubstantiated attack on the character, repu-

tation and good name of a particular individual.’’ Appleyard v.

Transamerican Press, Inc., 539 F.2d 1026, 1030 (4th Cir. 1976),

cert. denied, 429 U.S. 1041 (1977) (footnote omitted).

There is no legitimate reason to extend protection to state-

ments that are not only false, but maliciously so. The American

press already enjoys extraordinary insulation from liability.

Even studies by observers sympathetic to the press have docu-

mented the media’s arrogance and remarkable insensitivity to

criticism. See R. Bezanson, G. Cranberg and J. Soloski, Libel

Law and the Press: Myth and Reality 40-51 (1987). That atti-

tude is, at least in part, an undesirable by-product of the New

York Times rule. In this context, adoption of petitioners’ views

can only encourage irremediable injury to future subjects of

press reports.

A. The Award of Compensatory Damages is Fully Supported

in Fact and in Law

Petitioners ask this Court to limit drastically the centuries-old

doctrine of presumed damages. That request flies in the face of

the Court’s endorsement of presumed damages in Dun & Brad-

street, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749 (1985). In

that case, not involving speech of ‘‘public concern,’’ presumed

damages were available merely on a showing of negligence. The

Dun & Bradstreet Court observed:

The rationale of the common-law rules has been the expe-

rience and judgment of history that ‘‘proof of actual dam-

age will be impossible in a great many cases where, from

the character of the defamatory words and the circum-

stances of publication, it is all but certain that serious

harm has resulted in fact.’’ As a result, courts for centuries

have aliowed juries to presume that some damage occurred

from many defamatory utterances and publications. Re-

statement of Torts § 568, Comment b, p. 162 (1938) (not-

ing that Hale announced that damages were to be

presumed for libel as early as 1670). This rule furthers the

State interest in providing remedies for defamation by en-

suring that those remedies are effective.

Id. at 760-61 (citations omitted).

Presumed damages do not represent, as petitioners contend,

recovery distinct from real, reputational injury. Rather, they

merely ‘‘approximate the harm that the plaintiff suffered and

thereby compensate for harms that may be impossible to mea-

sure.”” Memphis Community School District v. Stachura, 477

U.S. 299, 106 S. Ct. 2537, 2545 (1986). See also R. Sack, Libel,

Slander, and Related Problems 347 (1980). No more than a nat-

ural and necessary inference from the trial proof, presumed

damages are restrained by the good sense of the jury, and, as

this case illustrates, the careful scrutiny of reviewing courts.

Consistent with these principles, the lower courts have not hesi-

tated to approve presumed damages awards. See, e.g., Gertz v.

Robert Welch, Inc., 680 F.2d 527, 540 (7th Cir. 1982), cert. de-

nied, 459 U.S. 1226 (1983) (‘‘because there was evidence of ac-

tual malice. . . Illinois law would permit, and the Constitution

would not prohibit, presumed damages.’’); Carson v. Allied

News Co., 529 F.2d 206, 214 (7th Cir. 1976); Price v. Viking

Press, Inc., 625 F. Supp. 641, 650 (D. Minn. 1985).

We hasten to add that the compensatory damages awarded

Brown & Williamson here rest only in small measure on a pre-

sumption of injury. It is noteworthy that, over Brown & Wil-

liamson’s objection, the jury was told nothing about any

‘*presumption’’ of injury. Instead, it was instructed to award

‘‘only such damages as will reasonably compensate [respon-

dent] for such injuries and damages’’ sustained as a ‘‘proximate

result”’ of the broadcast. Brown & Williamson’s damages were

supported by direct proof. As the Court of Appeals predicted in

its 1983 opinion:

Accusing a cigarette company of what many people con-

sider the immoral strategy of enticing children to smoke—

enticing them by advertising that employs themes

exploitive of adolescent vulnerability—is likely to harm

the company. It may make it harder for the company to

fend off hostile government regulation and may invite re-

jection of the company’s product by angry parents who

smoke but may not want their children to do so. These

harms cannot easily be measured, but so long as some

harm is highly likely the difficulty of measurement is an

additional reason, under the modern functional approach

of the Illinois courts, for finding libel per se rather than in-

sisting on proof of special damage.

(App. 63a)

Thus, the testimony at trial demonstrated the pervasive effect

of the broadcast in the Chicago area. The Seventh Circuit’s

1987 decision summarized the evidence of reputational injury as

follows:

First, Brown & Williamson’s general counsel testified that

after the broadcast there were calls from the field sales

force indicating that their contacts were asking ‘‘how in

the world could Brown & Williamson have done such a

thing.’’ Second, a department sales manager for Brown &

Williamson testified that sales managers in the Chicago

area had received negative comments from distributors,

retailers, and consumers. The reports he received indicated

that the sales staff had been disrupted in their normal ac-

tivities by questions from retailers and consumers about

the broadcast. Third, the former Vice President of Mar-

keting for Brown & Williamson testified that the company

had a reputation it cared about and that he believed that

Viceroy’s customers care about the reputation of the com-

pany from which they buy cigarettes. He also testified that

the company’s reputation among governmental entities

was important because the cigarette industry is such a

closely regulated industry. Fourth, the company intro-

duced evidence that the Perspective (including its rebroad-

casts) was seen by over 2.5 million people in the Chicago

area. In addition, over two million people read a 1984 ar-

ticle in the Saturday Evening Post which repeated some of

the most damaging portions of the Perspective.

(App. 39a) In addition, a Chicago cigarette wholesaler unaffili-

ated with Brown & Williamson testified about the industry’s

affairs, and the impact and circulation of petitioners’ libel in

the Chicago community.

Petitioners’ claim that their libel caused no ‘‘actual injury’”’ is

astonishing. In fact, the broadcast was all the more damaging

because of petitioners’ promotional efforts designed to create

an image of CBS and Jacobson as reliable, credible sources of

news. In a pretrial memorandum, petitioners offered to stipu-

late that ‘‘WBBM news programs and Mr. Jacobson’s Perspec-

tives are perceived to be reliable sources of information and

that WBBM’s audience believes what WBBM broadcasts’’ (em-

phasis added). As the Court of Appeals noted, the broadcast

was made ‘‘in one of the largest television markets in the coun-

try,’’ by ‘‘a veteran journalist who was trusted by the public

and promoted by his employer as someone who ‘always leave|[s]

you informed.’ ’’ (App. 46a) Furthermore, ‘‘the text of the

broadcast carried a very substantial sting that must have hurt

both the reputation of Brown & Williamson and its parent com-

pany (which as CBS’s counsel pointed out at trial owns one of

the most respected department stores in Chicago) [Marshall

Field’s]}.’’ Ud.)

Brown & Williamson proved ‘‘impairment of reputation and

standing in the community,’’ Gertz, 418 U.S. at 350, through

direct testimony. The damage inflicted was massive because the

libel was vicious, widely circulated and broadcast repeatedly on

Chicago’s then-most popular news program. There is no basis

for petitioners’ attack on the compensatory damages award.

B. The Punitive Damages Awards Are Fully Justified

Petitioners ask the Court to limit punitive damages to ‘‘cases

of truly malicious conduct involving deliberate lies or calculated

falsehoods.’’ (Pet. at 19) The jury and the two courts below all

recognized this as just such a case. CBS’s egregious misconduct,

both before and after the broadcast, mandated a punitive dam-

ages award.

As this Court held in Curtis, specifically rejecting a constitu-

tional challenge, ‘‘punitive damages serve a wholly legitimate

purpose in the protection of individual reputation,’’ 388 U.S. at

161, and ‘‘the constitutional guarantee of freedom of speech

and press is adequately served by judicial control over excessive

jury verdicts . . . and by the general rule that a verdict based

on jury prejudice cannot be sustained even when punitive dam-

ages are warranted.’’ /d. at 160. In Davis v. Schuchat, 510 F.2d

731, 737-38 (D.C. Cir. 1975), the court wrote:

As Justice Brennan recognized in Rosenbloom, the First

Amendment requires that press and speech comment on

matters of public interest be given the wide latitude

granted by the Times standard. Once that latitude is ex-

ceeded, however, we fail to perceive that any further pur-

pose is served by eliminating traditional punitive damages,

which have always been subject to correction for excessive-

ness.

Under the precedents of this Court, as well as Illinois law, pu-

nitive damages may be constitutionally awarded in a libel case

upon a showing of actual malice. Gertz, 418 U.S. at 349; Fopay

v. Noveroske, 31 Ill. App. 3d 182, 334 N.E.2d 79, 92 (Sth Dist.

1975). In this case, the District Court required even more—

proof of common-law malice—and Brown & Williamson met

that heavy burden. (App. 122a)

Petitioners present no authority for their contention that a li-

bel defendant should be immunized from punitive damages

solely because the victim was a public figure, and/or the libel

concerned a matter of public interest. Such a rule would excuse

libel defendants from the full consequences of conduct such as

that evidenced here: publication of a calculated lie for the pur-

pose of injuring respondent and hyping CBS’s ratings. More-

over, after the jury verdict on liability, petitioners defiantly

proclaimed that they would continue their irresponsible con-

duct. That recalcitrance further justified punitive damages. See

Goldwater v. Ginzburg, 414 F.2d 324, 341 n.27 (2d Cir. 1969),

cert. denied, 396 U.S. 1049 (1970).

There is no shortage of cases upholding punitive damages in

Situations involving public figures and matters of public con-

cern. Appleyard v. Transamerican Press, Inc., 539 F.2d 1026,

1029-30 (4th Cir. 1976), cert. denied, 429 U.S. 1041 (1977);

Buckley v. Littell, 539 F.2d 882, 897 (2d Cir. 1976), cert. de-

nied, 429 U.S. 1062 (1977) (punitive damages available even

where no more than nominal compensatory damages awarded);

Carson v. Allied News Co., 529 F.2d 206, 214 (7th Cir. 1976);

Maheu v. Hughes Tool Co., 569 F.2d 459, 478-79 (9th Cir.

1977); Davis v. Schuchat, 510 F.2d 731, 737 (D.C. Cir. 1975);

Goldwater v. Ginzburg, 414 F.2d at 340-41. See also Brown &

Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262, 273 (7th

Cir. 1983) (‘‘actual, general, and punitive’? damages recover-

able on proof of actual malice).

Petitioners’ claim that that actual malice does not alone jus-

tify punitive damages is no more than a matter of academic in-

terest in this case. The courts below also found proof of express

malice. (App. 122a) The authorities discussed above show that

actual malice is indeed sufficient for punitive damages, but that

issue is not presented on this record.

Petitioners do not and cannot contend that the punitive dam-

age awards—representing minute fractions of petitioners’ great

wealth—were in any sense excessive. Brown & Williamson’s at-

torneys’ fees at the time of trial, a relevant factor under Illinois

law, alone amounted to more than two-thirds of the punitive

damages awards. (App. 123a) Drawing on all this evidence, the

District Court and the Seventh Circuit upheld the awards with-

out hesitation. (App. 47a-48a)

C. The Damage Award Presents No Eighth or Fourteenth

Amendment Issue

No more availing is petitioners’ argument that the damage

awards offend the Fourteenth and Eighth Amendments. There

is no *‘constitutional flaw’’ (Pet. at 27) in this case because, as

discussed above, there is clear and convincing proof of actual

malice, substantial proof of actual injury to Brown & William-

son’s reputation, and compelling evidence of common-law mal-

ice. Nor is there any ‘‘gross disproportion’’ between the

compensatory and punitive damage awards. None of petition-

ers’ authorities discussing the Fourteenth and Eighth Amend-

ments are apposite.*

Petitioners’ complaint about ‘‘standardless and deferential

appellate review’’ of First Amendment cases is meritless. The

reversal rate in libel cases is staggeringly high and, more impor-

tantly, the Court of Appeals in this case made a searching re-

view of the record. Far from being ‘‘deferential,’’ the Seventh

Circuit reviewed de novo every aspect of the record, and slashed

the compensatory damages award by two-thirds. In view of

their gross misconduct, it ill-behooves petitioners to question

the constitutional validity of this award or the diligence of the

courts below.

4 Aetna Life Insurance Co. v. Lavoie, 475 U.S. 813 (1986), did not

even reach the issue of whether an excessive punitive damage award

may violate the Fourteenth and Eighth Amendments. And Banker’s

Life & Casualty Co. v. Crenshaw, No. 85-1765 (oral argument Nov.

30, 1987), involves the issue of whether an award of punitive damages

that is ‘‘grossly disproportional’’ to the award of actual damages con-

stitutes an excessive fine prohibited by t..c Eighth Amendment. Peti-

tioners do not argue, nor could they, that an issue of proportion is

presented here. The punitive damages awards in this case clearly are

not excessive or unduly burdensome for petitioners. In addition, as one

court has held, the Excessive Fines clause ‘‘has no application to a civil

proceeding involving a punitive claim ancillary to a civil cause of

action.’ Palmer v. A.H. Robins Co., 684 P.2d 187, 217 (Colo. 1984)

(en banc).

THE JURY AND TWO LOWER COURTS EACH COR-

RECTLY FOUND ACTUAL MALICE

Petitioners and respondent have litigated actual malice five

times in this case, always with the same result. The District

Court found actual malice on three occasions, denying CBS’s

motions for summary judgment, directed verdict and judgment

notwithstanding the verdict. The jury found actual malice in re-

sponse to a special interrogatory. The Court of Appeals found

actual malice in its painstaking 1987 opinion. Petitioners raise

the issue here only out of reflex.

It is difficult to imagine a more ‘‘clear and compelling’’ case

of actual malice. We briefly summarize the evidence here, and

respectfully refer the Court to the detailed opinions of the

courts below.

1. Petitioners’ Admission. Jacobson conceded on the stand

that he never believed Brown & Williamson had ever published

a ‘‘pot, wine, beer and sex’’ advertisement. As the courts below

held, it is ‘“‘inconceivable’’ petitioners did not intend to-state in

the broadcast that respondeni was indeed circulating such ads.

Jacobson’s testimony thus ‘‘constitutes an admission on the is-

sue of actual doubt or reckless disregard of the falsity of the

broadcast.’’ (App. 95a) The fact-finders below firmly rejected

petitioners’ jesuitical re-interpretation of the broadcast. Time,

Inc. v. Pape, 401 U.S. 279 (1971), on which petitioners rely,

concerned a ‘‘rational interpretation’’ of a document that

‘bristled with ambiguities.’’ 401 U.S. at 290. It does not apply

to the incredible interpretation of the broadcast that petitioners

cooked up in the heat of trial.

2. Deliberate Distortion of the FTC Staff Report. Petitioners

knew from the plain language of the FTC Staff Report—their

main source—that ‘‘pot, wine, beer and sex’’ did not describe a

real ad campaign. It was instead an observation from a six-year

old report prepared by a corsultant hired by Brown & William-

son's outside advertising agency. Yet the broadcast portrayed

the Staff Report as proof that Brown & Williamson had en-

dorsed this ‘‘strategy’’ and was currently running ‘‘pot, wine,

beer and sex’’ ads.

3. Petitioners’ Own Investigation Proved Falsity. All the evi-

dence turned up in Radutzky’s investigation showed that the

broadcast was false. None of the news articles Radutzky gath-

ered asserted that Brown & Williamson had ever published a

‘‘pot, wine, beer and sex’’ ad. The Brown & Williamson

spokesman with whom Radutzky spoke said explicitly that the

company had rejected the ‘‘strategy’’ and fired its advertising

agency. (Radutzky chose not to call the agency itself.) And, de-

spite his review of ‘‘zillions’’ of cigarette ads, Radutzky was un-

able to come up with a single example of the offending

advertising.

4. Selective Destruction of Evidence and False Trial Testi-

mony. Perhaps the most compelling evidence of actual malice

was petitioners’ bad faith, selective destruction of evidence, and

their false trial testimony about the circumstances of the de-

struction. Petitioners now brazenly contend that their act of

bad faith should not be held against them, and that no inference

should be drawn from the destruction of crucial evidence. That,

of course, is just the result Radutzky hoped for when he purged

his files of damning documents. By no stretch of the imagina-

tion does the First Amendment require society to condone ob-

struction and perjury when accomplished by the press.°

On this record, no further consideration of actual malice is

warranted.

5 Petitioners’ assertion notwithstanding, both CBS and Jacobson were

properly held responsible for the conduct of their employee, Radutzky,

and his malice is imputed to them. Restatement (Second) of Agency

§§ 219(2), 228(1) (1958); American Society of Mechanical Engineers v.

Hydrolevel Corp., 456 U.S. 556, 564, 566-67 (1982). Petitioners’ con-

tention that an employer is not responsible for actions of an employee

which are ‘‘contrary to policy’’ is frivolous.

CONCLUSION

The petition for a writ of certiorari should be denied.

Dated: New York, New York

March 16, 1988

Respectfully submitted,