Petition for Writ of Certiorari — Locricchio v. Evening News Ass'n
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Gl-Lise FILED
JAN 13 1992
No. OFFICE_OF_THE CLERK
Iu Che
Supreme Court of the Hnited States
October Cerm, 1991
we
JOSEPH J. LOCRICCHIO AND GARY FRANCELL,
avo Petitioners,
THE EVENING NEws ASSOCIATION, INC.,
MICHAEL F. WENDLAND AND JEAN GADOMSKI,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF MICHIGAN
—————————
- AND APPENDIX -
JEREMIAH J. KENNEY
Counsel of Record
PAMELA HOBBS
KITCH, SAURBIER, DRUTCHAS,
WAGNER & KENNEY, PC.
Tenth Floor
One Woodward Avenue
Detroit, Michigan 48226
(313) 965-7411
Attorneys for Petitioner
Interstate Brief & Record Company, a division of North American Graphics, Inc.
1629 West Lafayette Boulevard, Detroit, MI 48216 (313) 962-6230
Supreme Court, U.S.
i
QUESTIONS PRESENTED
WHETHER THE FIRST AND FOURTEENTH AMENDMENTS TO
THE UNITED STATES CONSTITUTION REQUIRE A STATE
APPELLATE COURT TO CONDUCT AN INDEPENDENT APPEL-
LATE REVIEW OF THE EVIDENCE OF FALSITY IN A PRIVATE-
FIGURE LIBEL ACTION AGAINST A MEDIA DEFENDANT AND
ALLEGED TO INVOLVE MATTERS OF PUBLIC CONCERN.
II.
WHETHER A STATE SUPREME COURT'S DETERMINATION
THAT ALLEGEDLY LIBELOUS SPEECH IS RHETORICAL HYPER-
BOLE PROTECTED BY THE FIRST AND FOURTEENTH AMEND-
MENTS TO THE UNITED STATES CONSTITUTION, SO AS TO
DEPRIVE PRIVATE-FIGURE LIBEL CLAIMANTS OF A BASIS FOR
RECOVERY, REQUIRES INDEPENDENT APPELLATE REVIEW BY
THIS COURT.
ii
LIST OF PARTIES
The parties to the proceeding below were the peti-
tioners Joseph J. Locricchio and Gary Francell and the
respondents The Evening News Association, Inc.,
Michael F Wendland and Jean Gadomski. Additional
defendants Pete Waldmeir and Bill Giles were defend-
ants through trial, at which time a motion for directed
verdict was entered in their favor; accordingly, they are
not named as parties herein.
TABLE OF CONTENTS
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CONSTITUTIONAL PROVISIONS INVOLVED .................
INTRODUCTION —- SUMMARY OF ARGUMENT ............
STATEMENT OF THE CASE:
l. JOSEPH J. LOCRICCHIO, GARY FRANCELL AND
PINE KNOB
ll. THE DETROIT NEWS’ “INVESTIGATION” OF PINE
ae a oo ve cand susvivas aa dhexkuksstniss viacens
a eee Pere, Warecees EUMRY ARTICLES. ........cccccccccccces
SE EMORIEIRS MURS EG IED | siccusissscccansasancerscacossnessccaensece
Oe ge | ee
occas ynicnsnnnsnsckhuasnsdabnanecease
C. Post-Trial Proceedings in the Trial Court ..
D. Proceedings in the Court of Appeals of
nS Sa aed aE Ne
E. Proceedings in the Supreme Court of
le cnassiicpucebnenin
REASONS FOR GRANTING THE WRIT:
| THE FIRST AMENDMENT DOES NOT MANDATE
INDEPENDENT APPELLATE REVIEW OF THE PURELY
FACTUAL ISSUE OF FALSITY IN A PUBLIC-INTEREST
LIBEL ACTION.
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on
iv
Page
A. Independent Appellate Review Is Applic-
able To Issues Of Law, Not Fact. ...........00.... 16
B. In Mandating Independent Appellate
Review Of The Issue Of Falsity, The
Michigan Supreme Court Misinterpreted
And Misapplied This Court's Decision In
Philadelphia Newspapers v. Hepps._ ..............+. 18
C. The Right To Trial By Jury Prohibits
Appellate Inquiry Into A Jury’s Factual
SE IIL. scscentexecspassaeetautonanstieersiamennconniee 20
ll. THE DECISION OF THE MICHIGAN SUPREME
COURT CONFLICTS WITH THE DECISIONS OF
OTHER FEDERAL AND STATE APPELLATE COURTS. 25
ll. INDEPENDENT APPELLATE REVIEW OF THE
MICHIGAN SUPREME COURT’S DETERMINATIONS
AS TO THE DEFAMATORY MEANING OF THE
ARTICLES IS CONSTITUTIONALLY MANDATED. ......... 26
RM MEIET a sccisatibnsestacudibericniciaaibnia nARaisivcies Solcchieoas einceesioaes 27
APPENDIX:
DECISION SOUGHT TO BE REVIEWED: OPINION of
the Michigan Supreme Court, 8/26/91 .................. A-]
TRANSCRIPT OF HEARING ON MOTION-FOR SUM-
MARY JUDGMENT - Wayne County, Michigan,
SE SN, MPI PME esicstcanthenaksciteispadincatcresaccsie. A-67
ORDER DENYING SUMMARY JUDGMENT - Wayne
County, Michigan, Circuit Court, 4/6/82 ............. A-77
ORDER DENYING MOTION TO CERTIFY QUESTION
FOR APPEAL — Wayne County, Michigan, Cir-
Se Ss EE ace dcainttae ncaa. A-78
Se
Page
ORDER GRANTING INTERLOCUTORY APPLICATION
FOR LEAVE TO APPEAL - Michigan Court of
Py SI Giibitcetind nate ees A-79
PER CURIAM OPINION [UNPI BLISHED) - Michigan
Court af Apgent, G24) oi A-80)
ORDER DENYING REHEARING - Michigan Court of
PPR TT IBS Siiccheekcdincce oe ae A-84
ORDER DENYING LEAVE TO APPEAL - Michigan
EOS COANE, AIS TIE oinsinecscascikecsrdeestbcsidcces A-85
ORDER DENYING RECONSIDERATION OF DENIAL OF
LEAVE TO APPEAL - Michigan Supreme Court,
REE scitshiscaimnntan cdo oes eee A-86
NOTIFICATION DENYING WRIT OF CERTIORARI —
United States Supreme Court, 11/13/84 .............. A-87
OPINION GRANTING DIRECTED VERDICT —- Wayne
County, Michigan, Circuit Court, issued 12/11/86 A-88
ORDER GRANTING DIRECTED VERDICT - Wayne
County, Michigan, Circuit Court, 1/5/87 ............ A-11]
PER CURIAM OPINION [UNPL BLISHED} REINSTATING
JURY VERDICT — Michigan Court of Appeals.
2/24/89
ORDER DENYING REHEARING OF 2/24/89 DECISION -
Michigan Court of Appeals, 5/22/89 o.....0.0.000..... A-12]
ORDER OF JUDGMENT ON JURY VERDICT —- Wayne
County, Michigan, Circuit Court, 8/4/89 ........... A-122
ORDER DENYING REHEARING OF 8/26/91 DECISION —
Michigan Supreme Court, 10/17/91 .................... A-124
EXCERPTED TRIAL TRANSCRIPT .....0...ccccccccccecceeeeeeees. A-125
Wau 0 PMID citi drat cedice wae nce eee A-192
vi
TABLE OF AUTHORITIES
Page
Cases:
Anderson v. Liberty Lobby, Inc., 477 US. 242 (1986) 23
Bose Corp. v. Consumers Union of United States,
rec, SR UR Se Cee tishtcercaianoes 15, 16, 17, 24
Caldwell v. Fox, 394 Mich. 401; 231 NW.2d 46
(SRE OED -<.cncicicédscscnkdnilgn sh eske eideiarsan eee eoee aa epee 12, 24
Dimick v. Schied:, 293 U.S. 474 (1935) ......0.... 21, 23
Dun & Bradstreet, Inc. v. Greenmoss Bldrs., Inc.,
RTE. CA. Peet COMED wxcssscsa three eens 24
Gazette, Inc. v. Harris, 229 Va. 1 (1985) ...................05. 26
Gertz v. Robert Welch, Inc., 418 US. 323 (1974) .... 15, 17
Gideon v. Wainwright, 372 US. 335 (1963) oo... 20
Greenbelt Cooperative Publishing Assn., Inc. v.
Brester, 358 US. G CGO): slecinssissniscagtaseiaseen 16, 26, 27
Harte-Hanks Communications, Inc. v. Connaughton,
We SA Ee CIGD seccssistnicsaro sua ccman 16, 24
Hess v. Indiana, 414 US. 105 (1973) oo. eee eee eee 16
In re Winship, 397 US. S56 CUSIO) occ. ccccvcescsennsspesesennses 24
Jenkins v. Georgia, 418 US. 153 (1974) oo... eceee. 17
Keeton v. Hustler Magazine, Inc., 465 U.S. 770
(BAPE). viccasnensnscxsxsensavanscasverseenbevnneebare aac naan wees 18
Kingsley Books, Inc. v. Brown, 354 US. 436 (1957) .... 22
Kois v. Wisconsin, 408 U.S. 229 (1972) ........cceeeeeeeee eens 16
Lansdowne v. Beacon Journal Publishing Co., 512
N.2..26 979; 32 Ohio Si: 3d TG CIGBE) svinssesscectsieccens 26
Letter Carriers v. Austin, 418 U.S. 264 (1974) ... 16, 26, 27
Vil
Page
Maheu vy. Hughes Tool Co., 569 F2d 459 (9th Cir.
Masson v. New Yorker Magazine, Inc., 501 US.
BD L. Ed, 2d 447 CIGBT) o...cccccscsesccoseceenees i. 22, oe at
Milkovich v. Lorain Journal Co., 497 U.S. __: 111 L.
i BG.) mea ee IA Sad Po BREDA Seen 0D 16, 19, 27
New York Times Co. v. Sullivan. 376 U.S. 254
SPOED cricucocicuesacsaeekaaat eer 15, 16
Palko v. Connecticut, 302 U.S. 319 (1937) ooocccccccecceeeeees 21
Parklane Hosiery Co., Inc. v. Shore, 439 US. 322
EPUEN IEE 5s urctenihy onascavaautncuseiis tecedieneus pate oeecm nae 20
Pennekamp v. Florida, 328% US. 331 (1946) ............ 16, 27
Peoples Wayne County Bank v. Wolverine Box Co.,
290 Mich. 273; 230 NW. 170 (1930) .................ceeeeeeee 20
Philadelphia Newspapers, Inc. v. Hepps, 475 US.
PR SWINE van cecheapuiisinss atesicsanapahunevanesnadeceei vain te oe
pene W. Camere, Fee US. UC TRIG): vvciccsecccccvcttacscssacscnvcaress 2]
Rouch v. Enquirer & News, 427 Mich. 157: 298
RE ID so coconctce ee a ee re 10
Street v. New York, 394 US. 576 (1969) .00.0............e. 16
Walker v. Sauvinet, 92 US. 90 (1876) oo....ccccccccccccceceeees 2()
Whitson v. Whiteley Poultry Co., 11 Mich. App. 598;
Sr GE IE RI oko ce cel cacess, cr acescuceceluccacoesiauacs 20
Constitutional Provisions:
Sms PU I PN ooo achncs cdecensvcnecevaie oe toecees 20
i ROU Or et re en Le ee 20
Viii
Page
Other Authorities: ~
Schauer, “The Role of the People in First Amend-
ment Theory,’ 74 Cal. L. Rev. 761 (1986) ............... 22
Schnapper, “Judges Against Juries — Appellate
Review of Federal Civil Jury Verdicts,” 1989
IN a INI URE Sanicdscakssceessicoreresseptansackasaoviaves 21
No.
Iu Che
Supreme Court of the United States
~~
October Cerm, 1991
JOSEPH J. LOCRICCHIO AND GARY FRANCELL,
a Petitioners,
THE EVENING NEws ASSOCIATION, INC.,
MICHAEL F. WENDLAND AND JEAN GADOMSKI,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF MICHIGAN
Petitioners, Joseph J. Locricchio and Gary Francell,
respectfully pray that a writ of certiorari issue to review
the judgment and opinion of the Supreme Court of
Michigan entered in this proceeding on August 26, 1991.
OPINIONS BELOW
The memorandum opinion of the Circuit Court for the
County of Wayne, Michigan, Michael J. Connor, Circuit
Judge, granting defendants’ motion for directed verdict
is unreported, and is reprinted in the appendix hereto,
p. A-88, infra. The per curiam opinion of the Court of
Appeals of Michigan, First District, reversing the deci-
sion of the Circuit Court for the County of Wayne and
reinstating the jury’s verdict, is unreported, and is
reprinted in the appendix, p. A-112, infra; the Court of
Appeals’ interlocutory opinion affirming the denial of
defendants’ motion for summary judgment is un-
reported, and is reprinted in the appendix, p. A-80, infra.
The opinion of the Supreme Court of Michigan,
reversing the decision of the Michigan Court of Appeals,
2
is reported at 438 Mich. 84; 476 NW.2d 112, and is
reprinted in the appendix, p. A-1, infra.
JURISDICTION
The judgment of the Supreme Court of Michigan was
entered on August 26, 1991. A timely motion for
rehearing was filed on September 12, 1991, and was
denied by Order dated October 17, 1991. This petition
for certiorari is filed within 90 days of that date. The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1257(a).
CONSTITUTIONAL PROVISIONS INVOLVED
United States Constitution, Amendment I:
Congress shall make no law ... abridging the
freedom of speech, or of the press... .
United States Constitution, Amendment VII:
In Suits at common law, ... no fact tried by a
jury shall be otherwise re-examined in any Court
of the United States, than according to the rules
of the common law.
United States Constitution, Amendment XIV, § 1:
No State shall make or enforce any law which
shall abridge the privileges or immunities of citi-
zens of the United States; nor shall any State
deprive any person of life, liberty, or property,
without due process of law... .
ce 0@ 20
M
INTRODUCTION - SUMMARY OF ARGUMENT
In this case, the Michigan Supreme Court, relying on
this Court's decision in Philadelphia Newspapers, Inc. v.
Hepps, 475 US. 767 (1986), held that the First Amend-
ment requires an appellate court reviewing a jury ver-
dict in a private-figure libel action against a media
defendant to conduct an independent examination of
the record to determine whether the plaintiff carried
his burden of proving falsity.
The effect of the Michigan Supreme Court's indepen-
dent review standard will be to give media defendants a
second chance to convince an independent fact-finder
as to this crucial element of a libel claim, and will
authorize appellate courts to ignore the factual determi-
nations of juries and reach their own verdicts. Such a
standard will effectively insulate the media from the lia-
bility determinations of the communities they serve,
and will significantly erode the finality of jury determi-
nations in public-interest libel actions, without serving
any legitimate constitutional purpose.
This Court should grant certiorari to settle the impor-
tant constitutional questions raised by the Supreme
Court of Michigan's novel application of this Court's
independent appellate review doctrine.
STATEMENT OF THE CASE
I.
JOSEPH J. LOCRICCHIO, GARY FRANCELL AND PINE KNOB
In 1964, petitioners Joseph J. Locricchio and Gary
Francell formed Indusco Corporation for the purpose of
developing commercial properties in Southeastern
Michigan; by 1969, the partners had successfully com-
4
two industrial parks located in the suburban Detroit area
of Oakland County (App., pp. A-153-A-159). During that
period, a friend took Locricchio to look at a 400-acre
parcel of land in a rural area near the city of Clarkston,
Michigan; the land bordered on a 14-acre parce! con-
taining a ski hill and chair lift. Locricchio fell in love with
the site (App., p. A-159).
The partners purchased both parcels and developed
an entertainment complex which included 1,000 condo-
minium units, a ski resort, an outdoor summer music
theatre, a championship golf course, restaurants and
other properties (App., p. A-165). By 1976, the complex,
known as Pine Knob, was the number one facility of its
kind in the world.
Il.
THE DETROIT NEWS’ “INVESTIGATION” OF PINE KNOB
The Detroit News, published by respondent The
~—~Evéning News Association, Inc., is Michigan's largest
newspaper, and enjoys a statewide circulation. In 1979,
the News assigned a recently-formed “investigative
team,” consisting of respondents Michael Wendland and
Jean Gadomski, to investigate “rumors of organized
crime involvement at Pine Knob.” The “investigation”
consisted of a review of court and land records and
materials in the News’ own library (Avp., p. A-140).
Wendland and Gadomski also interviewed Locricchio
and Francell at the hotel at Detroit Metropolitan
Airport! (App., p. A-143). At the April 10, 1979, interview,
: By agreement with petitioners’ attorney, Ted Tetzlaff, the
interview was to be tape recorded in duplicate; however, the “dupli-
cate” tapes provided by the News to Tetzlaff at the close of the
interview were blank (App., pp. A-150-A-151). The undisputed trial
evidence established that a “transcript” of the tapes, prepared by
Gadomski and used to write the resulting articles, contained signifi-
cant omissions and inaccuracies and was not a reliable record of
petitioners’ statements (App., pp. A-145-A-150; A-171—A-184).
5
Wendland told the partners that the News’ investigation
had failed to uncover any organized crime involvement
at Pine Knob, and that Wendland and Gadomski did not
believe that they were members of the Mafia (App., pp.
A-136-A-137).
Il.
THE “PINE KNOB STORY” ARTICLES
The articles which form the basis of this lawsuit (App.,
pp. A-196-A-226) appeared on the front page of The
Detroit News during the four-day period of Sunday, April
22, through Wednesday, April 25, 1979. The series, enti-
tled “The Pine Knob Story,” was presented as investiga-
tive journalism. A separate article appearing in News
Editor Bill Giles’ “News Notes” column on Sunday, April
22 (App., pp. A-196-A-198), described Wendland, the
principal author of the series, as one of the reporters
involved in investigating corruption and organized crime
in Arizona following the murder of Arizona newsman Don
Bolles. A box insert repeated in each installment encap-
sulated the theme of the four-part series:
In the last eight years Pine Knob, in Oakland
County, has developed from a losing ski resort to
one of the nation’s foremost entertainment com-
plexes, worth millions. During these years the
persistent question in Michigan and elsewhere
has been “is it Mafia?” This is the first [second,
etc.] of four articles resulting from [a] two-
months’ examination by The News of Pine Knob’'s
finances and ownership.
Part One of “The Pine Knob Story” (App., pp. A-198-
A-206) was headed “The Pine Knob story: How 2 friends
and hustle created a big resort, millions in debt and a
question: ‘Is it Mafia” Under an aerial photograph of
6
Pine Knob was a map of the area near Clarkston,
Michigan, where Pine Knob is located, and the italicized
insert paragraph with its tantalizing question, “Is it
Mafia?” The words “Mafia,” “mob,” “organized crime,”
“Mafiosi,” and “Sicilian heritage” were scattered
throughout the first installment, a total of thirteen
times. The article described the partners as “[p]|ower
brokers with the right connections — widely suspected
to be Mafia,” and stated that they “agreed to talk to The
News ... ‘to clear the air’”? (App., p. A-198).
Part Two of “The Pine Knob Story” (App., pp. A-207-
A-215) was entitled “The Pine Knob story: How loan got
‘washed’.” Immediately below this headline was a photo-
graph of a Lincoln Continental with its trunk lid open;
the photograph was captioned, “Harvey Leach’s car was
found with his body in the trunk.” Beneath this headline
and photograph was the series’ recurrent insert with its
insistent question, “Is it Mafia?”
The article purported to detail the partners’ efforts to
raise capital for Pine Knob through what the News char-
acterized as a “money wash.” Interwoven with this
account were the details of the two totally unrelated
murders of Agnes Brush and Harvey Leach, in a section
containing the comment:
Locricchio and Francell say they know no-
thing about either killing, and insist that
it is coincidental that some of the same
people were involved in the loans to Leach and
2 In fact, Wendland’s trial testimony established that the Pine
Knob Story articles contained fabricated quotations that attributed
untrue factual assertions to petitioners. For example, Wendland
admitted that the statement “Even my mother sometimes has her
doubts” regarding his alleged Mafia connections, although pub-
lished as a verbatim quotation,was not an accurate report of
Locricchio’s remarks (App., p. A-139).
(
Pine Knob. A score of police agencies have in-
vestigated the murders and have not proved
otherwise.
The third installment of “The Pine Knob Story” (App.,
pp. A-215-A-221) was entitled “The Pine Knob story: A
brush with bankruptcy.” Beneath the headline, an itali-
cized insert contained the same paragraph published in
Parts One and Two. Part Three described EB. investiga-
tions of Locricchio and Francell in 1972 and 1975 and an
unrelated 1975 FBI. investigation into suspected hidden
ownership interests in the Aladdin Hotel and Casino in
Las Vegas, Nevada. The details of these investigations
were interwoven to suggest a continuous, related chain
of events.
Part Four of the “Pine Knob Story” (App., pp. A-221-
A-226) appeared under the headline “The Pine Knob
story: Partners stalked by Mafia-hunters,” and contained
the same insert as the preceding three articles. The
words “Mafia,” “organized crime,” “Sicilian family,” and
“Sicilian heritage” were sprinkled throughout the text of
Part Four. The article stated:
Locricchio’s is an extremely large family and
there are a considerable number of other Joseph
Locricchios in the Detroit area, which has been
known to confuse police and journalists.
These articles resist summarization. However, viewed
in their entirety, the articles portrayed Locricchio and
Francell as members or associates of the Mafia, linked
them with two unsolved murders, and suggested that
their development and operation of Pine Knob had
involved them in a series of questionable and/or illegal
financial transactions. The partners demanded a retrac-
tion. The newspaper refused.
8
IV.
PROCEDURAL HISTORY
A. Pre-Trial Proceedings
On April 3, 1980, petitioners instituted the present
action in the Circuit Court for the County of Wayne,
Michigan, alleging, inter alia, that “The Pine Knob Story”
articles were libelous. After petitioners served inter-
rogatory answers indicating that their libel claims were
not necessarily based on a particular false statement,
but on the inferences contained in the articles, respond-
ents filed a motion for summary judgment. Respondents
argued that petitioners could not maintain their libel
claims because they had failed to demonstrate that any
particular sentence in the articles was “factually false.”
The court denied this motion, holding that factual fal-
sity may pertain to implications as well as to direct
statements.
Respondents initiated an interlocutory appeal from
this order in the Court of Appeals of Michigan. In a
unanimous, unpublished per curiam opinion dated
August 24, 1983 (App., pp. A-80-A-83), the Court of
Appeals affirmed the trial court's ruling, holding that
insinuation, imputation or inference may be as defama-
tory as a direct, unveiled assertion, and that peti-
tioners’ pleadings gave rise to an issue of fact which
must be left to the trier of fact.?
B. Trial And Verdict
The jury trial of this matter commenced on July 10,
1985, before Wayne County Circuit Court Judge Michael
$ Respondents subsequently filed a motion for rehearing in the
Court of Appeals, an application for leave to appeal and a motion
for rehearing in the Supreme Court of Michigan, and a petition for
certiorari in this Court, all of which were denied.
9
J. Connor, and continued for eight weeks. At trial,
respondent Michael Wendland testified that, during the
News’ investigation, “we did not find any organized
crime involvement in the ownership of Pine Knob, nor
did we think that {Locricchio and F:ancell] were mem-
bers of the Mafia” (App., p. A-137). Wendland admitted
that at the time that the articles were published, he had
concluded that the partners were not members of the
fatia (App., p. A-138).
Wendland also testified that he had investigated the
Leach murder for the News in 1974, and had written a
series of articles detailing the results of his investiga-
tion; he admitted that he had never encountered the
partners’ names during his investigation and did not
believe that they were ever suspects in that case (App..,
p. A-128). He testified that he knew in 1974 that
Locricchio and Francell were not suspects in the Brush
murder, and that, at the time of the publication of “The
Pine Knob Story” articles, he did not believe that they
were ever suspects in either murder (App., pp. A-128-
A-129). Respondent Jean Gadomski’s testimony was con-
sistent with that of Wendland (App., pp. A-142-A-143).
Both Locricchio and Francell testified that they were
not members of the Mafia and had never been members
of organized crime (App., pp. A-169; A-184). Locricchio
also testified that rumors of Mafia involvement at Pine
Knob began with the publication of an article by New’s
columnist Pete Waldmeir in 1972 (App., pp. A-174-A-176).
After respondents’ motion for a directed ver-
dict was taken under advisement, the jury was in-
structed that petitioners bore the burden of proving
that respondents published materially false state-
ments concerning petitioners to third persons, that
those statements had a tendency to harm petitioners’
reputations, and that respondents acted with actual
10
malice’ (App., pp. A-189-A-190). The jury was specifi-
cally instructed that petitioners could not satisfy their
burden of proving material falsity if the articles were
substantially true, and that “[s]light inaccuracies which
do not alter the complexion of the matters reported, do
not constitute material falsity” (App., pp. A-188).
On September 4, 1985, the jury returned a verdict in
favor of petitioner Gary Francell and awarded him
$3 million in compensatory damages, finding publica-
tion, material falsity, harm to reputation and actual
malice.*> The jury found no publication as to the claims
of petitioner Joseph Locricchio.
C. Post-Trial Proceedings in the Trial Court
On December 11, 1986, Judge Connor issued his
written opinion directing a verdict in favor of respon-
dents, holding that “liability [for libel] cannot be
4 The trial court ruled that petitioners were not public figures,
but that the articles concerned matters of public interest. At that
time, Michigan’s public-interest qualified privilege required the
plaintiff in a public-interest libel case to prove actual malice. This
rule was abrogated in 1986, in Rouch vy. Enquirer © News, 427 Mich.
157; 298 N.W.2d 245, and a negligence standard was substituted.
° The jury completed a separate verdict form, containing ten
interrogatories, foreach plaintiff (App., pp. A-192-A-195). The jury
answered the first four questions on Fraacell’s verdict form as
follows:
1. Did the defendants make the statement of fact com-
plained of to a third person by printing, writing and, or
pictures? YES.
2. Was the statement false in some material respect and
did the statement have a tendency to harm the plain-
tiff’s reputation? YES.
3. Was the statement of and concerning the plain-
tiff? YES.
4. Did the defendants have knowledge that the statement
was false or did defendants act with reckless disregard
as to whether the statement was false? YES.
1]
imposed for journalistic inferences allegedly arising
from the reporting of true facts about matters of public
interest and concern” (App., p. A-89). The opinion enu-
merated Judge Connor’s findings of fact as to what he
believed petitioners had not proven to be false at trial
(App., pp. A-108-A-110).
D. Proceedings in the Court of Appeals of Michigan
Petitioners timely filed their claim of appeal in the
Court of Appeals of Michigan. On February 24, 1989, the
court issued its unanimous, unpublished per curiam
opinion, reversing Judge Connor's decision and re-
instating the jury’s verdicts (App., pp. A-112-A-120). The
court grounded its decision upon the doctrine of the
law of the case, noting that it had rejected respondents’
arguments regarding the viability of an action for libel
by implication in its interlocutory opinion in this case,
and stating that “we do not believe that the United
States Supreme Court’s decision in Philadelphia News-
papers, Inc v. Hepps ... bars a suit for defamation by
implication” (App., p. A-119).6 Defendants’ motion for re-
hearing was denied.
E. Proceedings in the Supreme Court of Michigan
Respondents’ application for leave to appeal was
granted by the Supreme Court of Michigan. Thereafter,
on August 26, 1991, the Supreme Court, in a divided
opinion, reversed the ruling of the Court of Appeals and
nullified the jury’s verdict.
The four-justice majority held that in a private-figure,
public-interest libel action involving a media defendant,
Respondents had argued that this Court’s use of the term
“the statement at issue” in Hepps requires a plaintiff to prove a
false statement, as opposed to an inference of implication, in order
to recover for libel.
12
a reviewing court has a constitutional duty to conduct
an independent examination of the record to determine
whether the plaintiff has carried his burden of proving
falsity (App., pp. A-22-A-26). The court based its
holding upon this Court’s decision in Philadelphia News-
papers, Inc. v. Hepps, 475 U.S. 767 (1986), stating that
“the Court in Hepps created an issue of constitutional
fact regarding whether a plaintiff carries the burden of
proving falsity” and that independent appellate review
of the issue of falsity in public-interest cases is “a log-
ical corollary to independent review of actual malice”
(App., p. A-26).
The majority then proceeded to review the record as
to both defamatory meaning and falsity, concluding that
“the record does not reveal that the plaintiffs proved
any material falsity by even a preponderance of the evi-
dence” (App., p. A-36). While agreeing that the implica-
tions contained in the articles could support an action
for libel,’ the court found that petitioners had failed to
prove the falsity of the central implication of the arti-
cles — that petitioners were members or associates of
organized crime (App., pp. A-43-A-44). The court dis-
carded without comment the standard of review appli-
cable to directed verdicts under Michigan law, which
requires the court to view the evidence in the light
most favorable to the non-movant,® substituting a stan-
dard in which the reviewing court reweighs the evidence
to determine whether the record contains the neces-
sary quantum of proof of falsity (App., pp. A-26-A-27).
7 The court stated that “we do not, and need not, disagree in
theory with the conclusion ... that a cause of action for libel by
implication might succeed without a direct showing of false state-
ments” (App., p. A-36, n. 32).
8 Caldwell v. Fox, 394 Mich. 401, 407; 231 N.W.2d 46 (1975).
13
Having thus defined the scope of its self-imposed mis-
sion of independent review, the majority felt free to dis-
regard petitioners’ trial testimony respecting the falsity
of the articles, which is not even referred to in the
court's factual summary (App., pp. A-13-A-18). In addi-
tion, although conceding that the evidence showed that
the statements contained in the headlines “Partners
stalked by Mafia-hunters” and “Mafia-hunters stalk
Locricchio, Francell” were false, the majority dismissed
these statements as “rhetorical hyperbole” protected by
the First Amendment (App., p. A-45). The majority then
disposed of the “troubling” photograph of Harvey
Leach’s car and its grossly misleading headline with the
statement, “the articles must be construed as a whole,
and the article later pointed out that intensive investiga-
tions by law enforcement agencies failed to link the
plaintiffs to the Leach (or Brush) murders” (App., p. A-45).
In a lengthy opinion concurring in the result only?
Chief Justice Cavanagh rejected the majority's holding
that the factual issue of falsity is subject to independent
appellate review as a question of “constitutional fact.”
pointing out that the majority's analysis “blurs the dis-
tinction between the defamation plaintiffs’ acknow-
ledged constitutional burden of proving falsity, and the
nature of the issue of falsity itself” (App., p. A-48,
Cavanagh, C.J., concurring; emphasis in original).
Justice Cavanagh noted that the fact that consti-
tutional principles require a party to bear the burden of
proof at trial does not itself give rise to a requirement
of independent appellate review, citing the consti-
tutional requirement in criminal cases of proof beyond
9 The concurrence concluded “that a defamation defendant
cannot be held liable for the reader’s possible inferences, specula-
tions, or conclusions, where the defendant has not made or directly
implied any provably false factual assertion” (App., p. A-57,
Cavanagh, C.J., concurring).
14
a reasonable doubt, which has never been thought to
require appellate courts to independently review the
underlying factual issue of guilt (App., pp. A-48-A-49).
He then concluded that the majority erred in analo-
gizing the issue of falsity to that of actual malice, since
actual malice is a mixed question of fact and law, while
falsity “would appear to be a classic issue of pure his-
torical fact” (App., p. A-49). Justice Cavanagh appeared
troubled by the fact that the majority’s independent
review of falsity, “to have any real meaning,
would necessarily have to apply even to credibility
issues, a province traditionally reserved most jealously
for the jury as trier of fact” (App., p. A-50, n. 2).
Justice Levin dissented “because there was sufficient
evidence for submission to the jury that the Detroit
News falsely implied that Locricchio and Francell were
members or associates of organized crime” (App., p. A-
99, Levin, J., dissenting).
Petitioners’ motion for rehearing was summarily
denied by Order dated October 17, 1991.
15
REASONS FOR GRANTING THE WRIT
THE FIRST AMENDMENT DOES NOT MANDATE
INDEPENDENT APPELLATE REVIEW OF THE
PURELY FACTUAL ISSUE OF FALSITY IN
A PUBLIC-INTEREST LIBEL ACTION.
Although the First Amendment’s guarantees of
freedom of expression are stated in unconditional lan-
guage, there are categories of communications to which
those guarantees do not extend, because they form “‘no
essential part of any exposition of ideas, and are of
such slight social value as a step to truth that any bene-
fit that may be derived from them is clearly outweighed
by the social interest in order and morality.” Bose Corp.
v. Consumers Union of United States, Inc., 466 U.S. 485,
904 (1984). Libelous speech has been held to be one
such category. /d. Yet, because of the tension that nec-
essarily exists between freedom of expression and the
important state4nterest in redressing wrongful injury to
reputation, this Court has extended a measure of
“strategic protection’ to defamatory utterances. Gertz v.
Robert Welch, Inc., 418 U.S. 323, 342 (1974).
In New York Times Co. v. Sullivan, 276 US. 254 (1964),
this Court held that the First Amendment prohibits a
public official from recovering damages for a defama-
tory falsehood relating to his official conduct unless he
proves that the statement was made with “actual
malice.” In so doing, this Court also imposed upon itself
a duty, “in proper cases,” to conduct an independent
examination of the whole record to ensure that the
judgment does not constitute “a forbidden intrusion
upon the field of free expression.” /d. at 285.
16
A. Independent Appellate Review Is Applicable To
Issues Of Constitutional Law, Not Fact.
The term “independent appellate review” refers to
the Court’s duty to independently evaluate the record
to determine whether a constitutional rule was properly
applied in the lower courts. See Bose Corp. v. Consumers
Union of United States, Inc., supra at 499-501; Harte-Hanks
Communications, Inc. v. Connaughton, 491 US. 657, 688-
689 (1989). However, not every case which involves the
application of a constitutionally-required legal standard
mandates independent appellate review: It comes into
play only in marginal cases, where the court is required
to determine the scope of the constitutional formula at
issue, because the particular facts present a question as
to whether the defendant's conduct falls within the
outer limits of the rule. Bose Corp. v. Consumers Union
of United States, Inc., supra at 503, n. 21.
The concept of independent appellate review has
been regularly applied by this Court to cases in which
the states have sought to impose liability on the basis
of particular forms of expression. See Hess v. Indiana,
414 US. 105, 108-109 (1973) (incitement to riot); Kois v.
Wisconsin, 408 US. 229 (1972) (obscenity); Street v. New
York, 394 US. 576 (1969) (“fighting words”); Pennekamp
v. Florida, 328 U.S. 331 (1946) (contempt of court). In
libel actions, independent appellate review has been
applied to the issue of whether the defendant's state-
ment was capable of bearing a defamatory meaning,
Milkovich v. Lorain Journal Co., 497 U.S. —-; 111 L. Ed.
2d 1 (1990); Letter Carriers v. Austin, 418 U.S. 264 (1974);
Greenbelt Cooperative Publishing Assn., Inc. v. Bresler,
398 US. 6 (1970); and whether the plaintiff pre-
sented constitutionally-sufficient evidence of actual
malice at trial, Harte-Hanks Communications, Inc. v.
Connaughton, supra; New York Times Co. v. Sullivan,
| acacia ita i
17
supra."° The common thread running through these
cases is that each involves the application of a defini-
tion deemed to be constitutionally mandated, thus
fixing the category of unprotected speech within sub-
stantive constitutional limitations which create an issue
of “constitutional fact.” Jenkins v. Georgia, 418 U.S 153,
160 (1974). The question of law invoking the duty of
independent appellate review is whether these consti-
tutionally fixed perimeters have been breached.
The “falsity” of an allegedly libelous statement is not
such an issue, because this Court has fashioned no consti-
tutional definition of falsity to which the doctrine of inde-
pendent appellate review arguably might attach. On the
contrary, in Masson v. New Yorker Magazine, Inc., 501
US. —; 115 L. Ed. 2d 447, 472 (1991), this Court declined
the defendants’ invitation to create such a consti-
tutional rule. Instead, Masson held that the common-law
definition of falsity is applicable to such cases, and rec-
ognized that the falsity vel non of allegedly libelous
statements is an issue of fact. /d. at 475.
Moreover, since publication by the media appears
to create a presumption that the material is “of pub-
lic concern,” the duty of independent appellate
review imposed by the Michigan Supreme Court in
theory extends to every jury verdict in every libel
action involving a media defendant. This Court has
never endorsed such a policy. Indeed, in Gertz v.
Robert Welch, Inc., supra at 343, the Court stated that
“this approach would lead to unpredictable results and
uncertain expectations, and it could render our duty to
supervise the lower courts unmanageable.” Accordingly,
this Court found the formulation of broad rules of gen-
10 However, see Bose Corp. v. Consumers Union of United States,
Inc., supra at 517, n. 1 (Rehnquist, J., dissenting).
18
eral application preferable to an “ad hoc resolution of
the competing interests at stake in each particular
case.” /d.
The rule stated in Philadelphia Newspapers, Inc. v.
Hepps, 475 US. 767 (1986) adequately protects the con-
stitutional interests at stake without the unnecessary
burden of independent appellate scrutiny of the jury’s
finding of falsity. Where a properly instructed jury,
placing the burden of proving falsity upon the plaintiff
(and thus resolving any doubts in the defendant's
favor), has found the defendant's statements to be false,
any constitutionally-inspired solicitude for the defen-
dant’s speech should vanish, since there is no consti-
tutional value in false statements of fact, and the public
interest is not served by the dissemination of false and
defamatory information. See e.g. Keeton v. Hustler Maga-
zine, Inc., 465 US. 770, 776 (1984) (“False statements of
fact harm both the subject of the falsehood and the
readers of the statement”).
B. In Mandating Independent Appellate Review Of
The Issue Of Falsity, The Michigan Supreme Court
Misinterpreted And Misapplied This Court's
Decision In Philadelphia Newspapers, Inc. v.
Hepps.
The Michigan Supreme Court has acknowledged that
this Court’s decisions in New York Times, Bose and
Connaughton provide no direct support for its conclu-
sion that independent appellate review of a jury's find-
ings as to falsity is constitutionally required;
nonetheless, the court held that this Court’s decision in
Philadelphia Newspapers, Inc. v. Hepps, supra, mandates
this result. The court interprets Hepps as forming the
springboard for a “logical extension” of the principle of
independent appellate review to encompass appellate
scrutiny of the factual determinations of a jury as to
19
the truth or falsity of the defendant's statements. This
reading of Hepps reveals a fundamental misunder-
standing of that decision as it relates to libel by
implication.
In Hepps, a majority of this Court concluded that the
First Amendment requires a rule that the plaintiff bear
the burden of proving falsity in a libel action against a
media defendant, where defendant's publication
involves a matter of “public concern.” However. nothing
in Hepps suggests that, in imposing this rule, this Court
intended to trigger independent appellate review of the
jury's factual determination of truth or falsity. Indeed, in
Milkovich v. Lorain Journal Co., supra, this Court recently
elucidated the application of the rule stated in Hepps to
actions involving libel by implication, and concluded
that the /ega/ question arising in this context is whether
defendant's statements imply an assertion of objective
fact that is capable of being proven true or false — not
whether falsity was proven to the appellate court's
Satisfaction.
In Milkovich, this Court repudiated the so-called Gertz
“opinion privilege,” noting that an expression of opinion
frequently implies the assertian of an objective fact.
The Court held that freedom of expression is ade-
quately secured by existing constitutional doctrine
without the creation of an artificial dichotomy between
“opinion” and fact, explaining, “[WJe think Hepps stands
for the proposition that a statement on matters of
public concern must be provable as false before there
can be liability under state defamation law, at least ...
where a media defendant is involved.” /d. at 18
(emphasis added).
Hepps ensures full constitutional protection for state-
ments having no provably false factual connotations.
while leaving unprotected statements which imply false
20
and defamatory facts. Thus in actions alleging libel by
implication, the dispositive legal question is whether a
reasonable fact-finder could conclude that the defend-
ant’s statement implied a defamatory factual assertion;
if so, the issue of falsity is for the jury. /d. at 19.
C. The Right To Trial By Jury Prohibits Appellate
Inquiry Into A Jury’s Factual Determinations.
The Seventh Amendment provides that “no fact tried
by a jury shall be otherwise re-examined in any Court
of the United States, than according to the rules of the
common law.” This Court has held that the Seventh
Amendment is not binding upon the states.’ Walker v.
Sauvinet, 92 US. 90, 92-93 (1876). Happily, however, con-
stitutional questions are always open. Gideon v. Wain-
wright, 372 US. 335, 346 (1963) (Douglas, J., concurring).
This case, which pits the rights of the media to dissemi-
nate information against the rights of individual citizens
harmed by the abuse of those rights, is a particularly
appropriate vehicle for the reconsideration of this
important constitutional question.
The Founders of our Nation considered the right to
trial by jury in civil cases to be an important bulwark
against tyranny and corruption, a safeguard too pre-
cious to be left to the whim of the sovereign or, for that
matter, to that of the judiciary. Parklane Hosiery Co.,
Inc. v. Shore, 439 US. 322, 343 (1979) (Rehnquist, J., dis-
senting). Those who favored juries believed that a jury
would reach a result that a judge either could not or
I Regardless of the applicability of the provisions of the Sev-
enth Amendment to this state-court proceeding, the analogous pro-
visions of the Michigan Constitution forbid the Michigan Supreme
Court to pass upon questions of fact. Mich. Const. 1963, Art. 1,
§ 14; Peoples Wayne County Bank vy. Wolverine Box Co., 250 Mich. 273,
278-280; 230 N.W. 170 (1930); Whitson vy. Whitely Poultry Co., 11
Mich. App. 598; 162 N.W.2d 102 (1968).
21
would not reach.” /d. at 344. Thus because the “‘[m]ain-
tenance of the jury as a fact-finding body is of such
importance ... any seeming curtailment of the right to
a jury trial should be scrutinized with the utmost
care.” Dimick v. Schiedt, 293 U.S. 474, 486 (1935).
Despite its central role in the formation of our gov-
ernment, this Court has held that the right to a jury
trial in civil cases is not among the requirements of due
process. Palko v. Connecticut, 302 U.S. 319, 325 (1937).
However, in view of our heritage and the history of the
adoption of the Constitution and the Bill of Rights, it
seems peculiarly anomalous to maintain that trial by an
independent jury selected from the common citizenry
is not a fundamental right. Reid v. Covert, 354 US. 1, 9
(1956). Petitioners submit that the finality of a jury’s fac-
tual determinations is a central element of the right to
trial by jury, which remains one of the most effective
barriers to arbitrary governmental action. /d. at 10. As
such, it is one of those fundamental rights which the
due process clause of the Fourteenth Amendment
makes binding upon the states.
Yet petitioners do not rely solely upon the funda-
mental nature of this constitutional right; rather, peti-
tioners would have this Court evaluate the decision of
the Michigan Supreme Court in light of the competing
12 This belief appears to have been well founded. A review of
all 208 published opinions in which a federal appellate court
resolved one or more challenges to the sufficiency of the evidence
to support a jury verdict during the period between October, 1984
and October, 1985, revealed an overall reversal rate of 49.0%. More-
over, jury verdicts in favor of plaintiffs were reversed in 52.5% of
the cases reviewed, while the reversal rate for defense verdicts was
only 23%. Schnapper, “Judges Against Juries — Appellate Review of
Federal Civil Jury Verdicts,” 1989 Wisconsin L. Rev. 237, 246-247,
250. The author states that “the likelihood that a jury verdict will be
overturned on appeal depends to a substantial degree on the background
of the judges who compose the particuiar panel that decides each case.”
Id. at 248 (emphasis added).
22
considerations which guide this Court in determining
the rights of libel plaintiffs against media defendants.
In extending the concept of independent appellate
review to the issue of falsity, the Michigan Supreme
Court eviscerates the role of the jury, in effect vesting
appellate courts with original jurisdiction in libel cases
involving media defendants. The court justifies its
assumption of the role of super-jury and appellate fact-
finder by noting that the doctrine of independent appel-
late review “reflects an inherent distrust of allocating
unlimited decisional power to juries in the First Amend-
ment context,” and quotes one commentator as stating
that “‘much of contemporary first amendment doctrine
_is devoted to protecting speech from the jury.”
In fact, however, libel cases against the media present
a particularly strong argument in favor of the jury, both
as fact-finder and as a procedural safeguard. The jury
represents a cross-section of the community and has a
special aptitude for reflecting the view of the average
person. Kingsley Books, Inc. v. Brown, 354 U.S. 436, 448
(1957). Trial by jury of libel actions thus provides a
peculiarly competent application of the standard for
judging libelous speech which, by its definition, calls for
an appraisal of the material according to the under-
standing of the average reader. Cf Masson v. New Yorker
Magazine, Inc., supra at 472 (“a statement is not con-
sidered false unless it ‘would have a different effect on
IS (App., p. A-27, n. 20; emphasis in original), citing Schauer,
“The Role of the People in First Amendment Theory,” 74 Cal. L.
Rev. 761, 765 (1986). However, Professor Schauer’s article, far from
supporting the court’s conclusion, decries the view that the role of
the jury should be diminished in such cases, noting that “[i]f a free
speech right derived from the notion of popular control is used to
deny that control, something very odd is happening,” and asking,
“What conception of freedom of speech and press would produce a
system in which an informed public would not be allowed to decide
just how much speech is wanted?” /d. at 781, 768.
the mind of the reader from that which the pleaded
truth would have produced’”).
Moreover, jurors, despite their brief public role as
arbiters of the facts at trial, are virtually always rela-
tively anonymous citizens; while judges, as public ser-
vants and public figures, are themselves particularly
vulnerable to attacks by the press and broadcast media.
Even more importantly, because jurors are chosen from
the ranks of American citizens, the collective opinions
of juries are more likely to express the consensus of
American values upon which our common-law system is
based than is the judgment of a judicial officer. Clearly,
it is for these reasons that the controlling distinction
between the power of the court and the power of the
jury is that the former is the power to determine the
law, and the latter to determine the facts. Dimick v.
Schiedt, supra at 486. This Court has expressly recog-
nized that this distinction is no less applicable to libel
cases than to other classes of common-law claims.
In Anderson vy. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986), this Court discussed the evidentiary standards
applicable to the granting of motions for summary judg-
ment and directed verdict, and iieid that the clear-and-
convincing evidentiary standard applicable to the
actual malice determination in public-figure libel actions
must be applied at the summary judgment stage, as
well as at trial. In imposing this burden, the Court
stated:
Our holding ... does nct denigrate the role of
the jury. It by no means authorizes trial on affi-
davits. Credibility determinations, the weighing
of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not
those of a judge, whether he is ruling on a
24
motion for summary judgment or for a directed
verdict."
The sole function of the jury is to determine issues of
fact, and we regularly entrust to juries the responsi-
bility of decisions affecting the lives and liberty of
American citizens, including decisions which directly
implicate constitutional rights.!° To suggest that jurors
are incompetent to inquire into the falsity of a defend-
ant’s libelous statements, thus distinguishing this partic-
ular inquiry from the myriad of no less weighty issues
entrusted to their judgment, is patently absurd. See Dun
& Bradstreet, Inc. v. Greenmoss Bldrs., Inc., 472 U.S. 749,
768, n.2 (1985) (White, J., concurring). For this reason,
as the decisions of this Court have consistently empha-
sized, the independent judgment exercised by appellate
courts in First Amendment cases does not extend to
such issues. See Bose Corp. v. Consumers Union of
United States, Inc., supra at 499-500; Harte-Hanks Commu-
nications, Inc. v. Connaughton, supra at 688; Masson v.
New Yorker Magazine, Inc., supra at 475.
The record in this case contains ample evidence to
support the jury’s findings of falsity and actual malice,
including the admissions of the authors of the articles
14 The Michigan Supreme Court interprets Anderson as
requiring a trial court passing upon a motion for directed verdict to
weigh the evidence to determine whether the substantive evidentiary
standard has been met (App., pp. A-27, n. 18). Such an undertaking
is, however, expressly forbidden by Anderson, which reaffirms the
applicability of the standard for directed verdict under Rule 50(a)
of the Federal Rules of Civil Procedure. /d. at 250-251. Michigan
applies the same standard. Caldwell vy. Fox, 394 Mich. 401; 231
N.W.2d 46 (1975).
15 This is particularly true in the criminal context, where the
due process clause of the Fourteenth Amendment protects a defen-
dant in a criminal case against conviction “except upon proof
beyond a reasonable doubt of every fact necessary to constitute the
crime with which he is charged.” In re Winship, 397 U.S. 358, 364
(1970).
eel
25
that their pre-publication investigation had convinced
them that there was no organized crime involvement in
Pine Knob.'® Under these circumstances, the Michigan
Supreme Court usurped the jury’s fact-finding function
when it determined that its verdict in favor of petitioner
Francell was “against the great weight of the evidence.”
THE DECISION OF THE MICHIGAN SUPREME COURT
CONFLICTS WITH THE DECISIONS OF OTHER
FEDERAL AND STATE APPELLATE COURTS.
Other appellate courts have refused to endorse the
extension of the doctrine of independent appel-
late review to issues not directly bearing upon
constitutionally-mandated standards. In Maheu v. Hughes
Tool Co., 569 F.2d 459, 464 (9th Cir. 1977), the Ninth Cir-
cuit declined to conduct a de novo review of the evi-
dence of falsity in a public-figure libel action, observing
that the standard of review proposed by the defendant
would “give [defendant] a second chance to convince
an independent fact finder.” Noting that “it is question-
able whether the issue of truth rises to the level of a
‘constitutional fact,” the court concluded that it was at
least arguable that defendant, by conceding the issue of
actual malice, had removed any First Amendment issue
from the case.'" /d., at 464-465.
Maheu is substantially indistinguishable from the pre-
sent case. In addition, the highest courts of two states
have refused to endorse the notion that independent
appellate review applies where actual malice is not at
16 See Statement of the Case, supra at p. 9.
17
In this case, the defendants did not formally concede the
issue of actual malice; however, the testimony of the reporters
amounted to a virtual concession of this issue.
26
issue. See Lansdowne v. Beacon Journal Publishing Co.,
512 N.E.2d 979; 32 Ohio St. 3d 176, 181 (1987) (indepen-
dent appellate review inapplicable to finding of negli-
gence); Gazette, Inc. v. Harris, 229 Va. 1, 20 (1985)
(independent appellate review inapplicable to issue of
compensatory damages). These decisions also conflict
in principle with the Michigan Supreme Court’s holding.
INDEPENDENT APPELLATE REVIEW OF THE MICHIGAN
SUPREME COURT’S DETERMINATIONS AS TO THE DEFAMATORY
MEANING OF THE ARTICLES IS CONSTITUTIONALLY MANDATED.
The Michigan Supreme Court also found that “the
headlines in the series, while arguably inflammatory, do
not convey false implications apart from the context of
the reported facts,” and that “[w]hile the headline that
the partners were ‘stalked by Mafia-hunters’ was some-
what misleading, since the ‘Mafia-hunters’ were not
stalking the plaintiffs, the headlines falls into the cate-
gory of permissible rhetorical hyperbole” (App., pp. A-44-
A-45).
The court's holding appears to draw its authority
from Greenbelt Cooperative Publishing Assn., Inc. v.
Bresler, supra, in which this Court held that a public
figure could not maintain a libel action based upon a
newspaper's report that he had been accused of “black-
mail” during a city counsel meeting, where, in the con-
text of the article, “even the most careless reader must
have perceived that the word was no more than rhetor-
ical hyperbole, a vigorous epithet used by those who
considerec [plaintiff's] negotiating position extremely
unreasonable.” /d. at 14. See also Letter Carriers vy. Austin,
supra at 284-286 (use of the word “traitor” in definition
of union “scab” could not form basis of libel action
where the epithet was “merely rhetorical hyperbole, a
27
lusty and imaginative expression of the contempt felt by
union members’ ).
In Greenbelt, this Court found that no reasonable
reader could have failed to discern that the charge of
“blackmail” was used in a purely figurative sense. In this
case, however, the headlines “Partners stalked by Mafia-
hunters” and “Mafia-hunters stalk Locricchio, Francell”
appeared in a series of articles which implicitly
promised to answer the question “is [Pine Knob]
Mafia?” In this context, the headlines were not “rhetor-
ical hyperbole” protected by the First Amendment.
This Court has repeatedly recognized that the exis-
tence of First Amendment-based limitations regarding
the manner in which defamatory meaning may be con-
veyed mandates independent evaluation by the Court.
See Greenbelt Cooperative Publishing Assn., Inc. v.
Bresler, supra at 11; Letter Carriers v. Austin, supra at 282:
Milkovich v. Lorain Journal Co., supra at 19; Masson v.
New Yorker Magazine, Inc., supra at 475-478. When the
highest court of a state has reached a conclusion on
such an issue, its reasoning is deserving of attention,
but its authority is not final. Pennekamp v. Florida, supra
at 335. Rather, this Court must examine for itself the
statements at issue and the circumstances under which
they were made, to see whether they are of a character
that those guarantees protect. /d.
CONCLUSION
Should the decision of the Supreme Court of Michigan
stand, the right to a trial by jury in public-interest libel
actions will be seriously eroded, both in Michigan and
in those other jurisdictions which choose to follow
Michigan's lead in requiring independent appellate
review of this quintessentially factual issue. Moreover,
28
the judicial quagmire created by the court’s decision
will inevitably further protract the appellate process
with respect to such cases, while yielding no counter-
vailing benefit in increased predictability of results.
Indeed, since the court has not seen fit to explicate the
constitutional rule laid down in its decision, it has virtu-
ally ensured that the courts will be clogged with appel-
late briefs testing the meaning and effect of its
pronouncements, absent intervention by this Court.
For the foregoing reasons, a writ of certiorari should
issue to review the judgment of the Supreme Court of
Michigan.
Respectfully submitted,
By: /s/ JEREMIAH J. KENNEY
Counsel of Record
/s/ PAMELA HOBBS
KITCH, SAURBIER, DRUTCHAS,
WAGNER & KENNEY, PC.
Tenth Floor
One Woodward Avenue
Detroit, Michigan 48226
(313) 965-7411
Dated: January 8, 1992
A-1
APPENDIX TO PETITION FOR CERTIORARI
DECISION SOUGHT TO BE REVIEWED
-CITED AS 476 NW.2d 112 (1991)-
(State of Michigan — Supreme Court)
(Argued October 3, 1990; Decided August 26, 1991)
(LOCRICCHIO v EVENING NEWS ASSOCIATION — Docket
No. 86351)
BRICKLEY, J.
Two competing legal regimes collide in libel cases
implicating First Amendment concerns. Libel law
enforces society's “pervasive and strong interest in pre-
venting and redressing attacks upon reputation” caused
by false and defamatory statements,! while consti-
tutional law safeguards the free flow of ideas and opin-
ions on matters of public interest that lie at “the heart
of the First Amendment's protection.”? The inherent
analytical tension between these regimes requires a
court both to protect reputational interests, and to
accord “breathing space” to principles of freedom of
press and speech. It remains a precarious task to bal-
ance these interests in cases, such as this one, that pit
| Rosenblatt v Baer, 383 US 75, 86; 86 S Ct 669; 15 L Ed 2d 597
(1966). Justice Stewart’s concurring opinion underscored that libel
law’s protection of reputation from defamatory falsehoods “reflects
no more than our basic concept of the essentia! dignity and worth
of every human being, — a concept at the root of any decent
system of ordered liberty.” (Stewart, J., concurring). /d. at 92.
2 First Nat'l Bank of Boston v Bellotti, 435 US 765, 776; 98 S Ct
1407; 55 L Ed 2d 707 (1978).
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private-figure plaintiffs against a report by a media
defendant on a matter of public interest.* This case
tosses into the balance the tortuous issue of libel by
implication, in contrast to specific allegations of defam-
atory false statements of fact.
For our purposes, the controversy began in 1979,4
when the Detroit News published a four-part series of
articles entitled “The Pine Knob Story.” In response, the
owners and developers of Pine Knob, plaintiffs Joseph
Locricchio and Gary Francell, sued the Evening News
Association (hereinafter the Detroit News) and its
reporters for libel in 1980.5 The plaintiffs alleged that
the entire tenor of the Pine Knob series falsely implied
that plaintiffs were members or associates of organized
crime, but did not identify any specific false statements
in the articles.
The Detroit News attacked the plaintiffs’ failure to
identify any specifically false factual statements, and
moved for summary judgment. Both the trial court and
the Court of Appeals denied the summary judgment
motion. The case went to trial.
3 This opinion elucidates in later sections that “|a] traditionally
.. Strong affinity [exists] between first amendment jurisprudence
and [public discourse].” Post, The constitutional concept of public dis-
course: Outrageous opinion, democratic deliberation, and Hustler Maga-
zine v Falwell, 103 Harv L R 603, 627 (1990).
4 The plaintiffs’ original action also included allegations of
defamation arising from articles published by Detroit News colum-
nist Pete Waldmeir in 1972 and 1977, and an editorial published by
Detroit News editor Bill Giles in 1979. Only the Pine Knob series of
articles remains at issue on appeal.
5 The plaintiffs also sued for invasion of privacy, intentional
infliction of emotional distress, and contractual interference. These
counts have been dismissed, and only the libel allegations remain in
dispute.
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A jury trial of prodigious length ultimately produced
a three million dollar verdict for plaintiff Francell.6 How-
ever, the trial court ruled that the evidence regarding
falsity did not support the jury’s verdict, and directed a
verdict for the Detroit News. The plaintiffs appealed the
posttrial directed verdict, and prevailed. The Court of
Appeals, citing its previous opinion on summary judg-
ment, applied the law of the case doctrine to reverse
the trial court, and reinstated the jury award.
This appeal can be said to involve essentially two
issues. First, did the Court of Appeals err in reversing
the trial court's directed verdict and reinstating the jury
verdict in favor of the plaintiffs? Second, can a private-
figure plaintiff recover damages in a media-defen-
dant/public-interest subject matter libel action where
the plaintiff alleges defamatory implication but fails to
identify or prove any materially false factual statements
or implications or omissions?’
We answer the first question affirmatively, and hold at
the outset that the Court of Appeals erred in relying on
the law of the case doctrine to reverse the trial court's
° The jury inexplicably found no publication of facts to a third
party with regard to plaintiff Locricchio and accordingly awarded
him zero damages.
‘ The parties do not dispute the configuration in this case of
private-plaintiff, public-interest /media-defendant. This opinion gen-
erally refers to the media nonmedia status of parties in the descrip-
tive rather than a normative sense. Dicta suggests that a majority of
the Supreme Court believes that “in the context of defamation law,
the rights of the institutional media are no greater and no less than
those enjoyed by other individuals or organizations engaged in the
same activities.” Dun & Bradstreet y Greenmoss Builders, Inc, 472 US
749, 784; 105 S Ct 2939; 86 L Ed 2d 593 (1985), (Brennan, J., dis-
senting). See note: The burden of proving truth or falsity in defamation:
Setting a standard for cases involving nonmedia defendants. 62 NYU LR
812, 840 (1987) (noting that the “Supreme Court has yet to decide
whether [the media-nonmedia] distinction is necessary or even
viable” ).
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directed verdict, instead of independently reviewing the
record in a libel case of First Amendment import. We
find it unnecessary under the facts presented to answer
the second question as posed because of a lack of
proven falsity in either the underlying facts or in their
implication, and hold simply that the plaintiffs failed to
carry their burden of proving either false and defama-
tory factual statements or false implications. Accord-
ingly, the Court of Appeals erred in reinstating the jury
verdict in favor of plaintiffs.
l
FACTUAL BACKGROUND
The facts presented show that editorial superiors at
the Detroit News asked veteran reporters Michael Wend-
land and Jean Gadomski to investigate rumors of orga-
nized crime involvement in the plaintiffs’ Pine Knob
entertainment complex in 1978. Reporters Wendland
and Gadomski conducted an intensive two-month inves-
tigation of the Pine Knob facility in 1979. Their investiga-
tion reached its apex with an audiotaped interview
conducted with the plaintiffs (in the presence of their
attorney) in April of 1979.
The interview with the plaintiffs, and the independent
research of the Wendland-Gadomski team, sowed the
seeds for the four-part “Pine Knob Story” series of articles
that ran in the Detroit News from April 22 to 25, 1979. The
centrality of the Pine Knob series to this lawsuit leads us
to detail the content of the four articles below.
A. The First Article: “The Pine Knob Story: How 2
Friends And Hustle Created A Big Resort, Millions
In Debts And A Question: ‘Is It Mafia?’”
The first article appeared under the rather sensa-
tional headline above. Its opening paragraph described
the plaintiffs as “land gamblers ... [p]ower brokers with
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the right connections — widely suspected to be
‘Mafia.’” The article quoted plaintiff Locricchio as con-
ceding “the feeling ‘Pine Knob is Mafia’ is so widespread
that ‘even my mother sometimes has her doubts.” The
article noted that although the plaintiffs “vehemently
deny mob involvement, they admit that they are on ‘all
the computer lists’ as organized crime figures.”
The first article further noted that plaintitts agreed to
talk to the Detroit News, in their words, to “clear the
air.” It provided provocative details of the plaintiffs’
backgrounds, informing readers, for example, that the
plaintiffs “wear silk shirts, drive expensive [cars] and fly
about the country in their own twin-e ngine airplane.”
The report asserted that “{Locricchio] is proud of his
Sicilian heritage and protective of his large family. He is
outgoing and talkative.” It described Francell in contrast
as “quiet, almost shy,” and noted that “Francell is of
French and German heritage.” The report stated that
although the plaintiffs felt “[a]ngered by what they
, Claim is harassment from the FBI. the Internal Revenue
Service and state and local law enforc ers, they never-
theless say they can see why ‘people think we’re mob.”
The report then detailed four key incidents, which
essentially comprise the gravamen of plaintiffs’ defama-
tion by implication claims, in what the authors
described as “the confusing, often incredible story” of
how the plaintiffs created Pine Knob. The article sum-
marized these four incidents as consisting of:
1) Two unsolved murders with links to people who
figured in Pine Knob’s development.
2) A so-called money wash designed to hide the
source of a $200,000 loan to Pine Knob.
3) “A $4 million cost overrun” by the plaintiffs in
the building of a Las Vegas Hotel theatre.
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4) Several investors associated with organized
crime who either lent or helped [the plaintiffs]
raise large sums of money.
The article sketched the history of Pine Knob from
the original ownership in the 1950s to the plaintiffs’
acquisition in 1971, asserting that “[t]he stories of mob
involvement in Pine Knob began with [the acquisition of
Pine Knob by reputed organized crime-associated
investors in 1962].” The plaintiffs purchased Pine Knob
from these investors in 1971.
The authors reported that the plaintiffs confronted
financial troubles virtually from the moment they
acquired Pine Knob: troubles so severe that by 1972 the
partners “needed a tremendous cash flow [but] didn't
have it.” The report asserted that the plaintiffs’ financial
condition had so dramatically deteriorated that
[by] the summer of 1972, [the plaintiffs] were in
the worst financial bind of their careers. They
needed $200,000 — “desperately,” says Locric-
chio — to stave off foreclosures on outstanding
notes. The partners would get the money. But in
doing so, they would become involved in an
incredible financial intrigue to be investigated by
three federal grand juries. More than anything
else, it was that loan that put Locricchio and
Francell on the organized crime lists.
The first article ended with a trailer in bold letters that
proclaimed: “Tomorrow: A money wash and two mur-
ders.”
B. The Second Article: “The Pine Knob Story: How
[A] Loan Got Washed.”
As promised, the second article appeared under the
above headline on Monday, April 23, 1979. It focused
mainly on two incidents: the unsolved 1972 and 1974
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murders of Agnes Brush and Harvey Leach, and a
$ 200,000 loan the plaintiffs obtained to finance the Pine
Knob complex in 1972.
Page one of the article displayed a photograph of an
automobile with its trunk open. The caption under this
photograph announced, “Harvey Leach’s car was found
with his body in the trunk.” The authors pointed out
that “Locricchio and Francell say they know nothing
about either [the Leach or Brush] killing .... A
score of police agencies have investigated the murders
and have not proved otherwise.”
The second article also asserted that “[the plaintiffs]
agree that their business connections, when diagramed
on a blackboard, make them appear to be ‘organized
crime figures,” and paraphrased Locricchio as asserting
“that such a diagram, drawn by police agencies, as well
as his Sicilian heritage, has unfairly put the sign of the
Mafia on Pine Knob.”
It recounted that an unknown assailant had stabbed
bookkeeper Agnes Bush to death three months after her
employer, William Magill, loaned $200,000 to the plain-
tiffs for Pine Knob financing. The article described the
late Harvey Leach as a “Southfield furniture magnate,”
who “had been working with [the plaintiffs] on con-
struction plans for a chain of furniture stores, called
Joshua Doore. Loans negotiated through the same
Toronto money broker [that engineered the so-called
money wash of the Magill loan] financed the building of
those stores.”
The article quoted Locricchio’s version of how the
controversial $200,000 Magill loan originated as follows:
| called [Pine Knob business associate Adele
Volpe] and said I needed $200,000 for a month,
two months... . [Volpe] said he couldn't
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help, but he’d see what he could do. [Volpe]
called me back. He said, “I have this friend. His
name is Bill Magill. He'll give you the money.”
However, because Magill feared that disclosure of his
finances might endanger the safety of his daughter, he
insisted as a condition that the plaintiffs conceal the
source of the loan.
Citing an FBI interview with Magill in 1973, the
authors noted that although Magill had never met the
plaintiffs, he “withdrew all but $5,000 of his life savings
to loan [the plaintiffs] $200,000." It also quoted an inves-
tigating FBI agent who asked, “Why on earth would two
sensible people take all their savings and give it to a rel-
ative stranger without any security ...?” The article
asserted that the plaintiffs failed to repay the Magill
loan until 1977, and then only “after Magill began a fore-
closure procedure against Pine Knob.”
The article then described the intricate method the
plaintiffs employed to keep secret the source of the
Magill loan with the help of “an old friend, Southfield
attorney Fred Gordon.” The authors noted that Gordon
had “once before ... helped Locricchio find a private
money source” by putting Locricchio in touch with
reputed organized crime figure Leonard Schultz in the
late 1960s. The article quoted Locricchio as explaining
that “Freddy [Gordon] had a brainstorm. He said, ‘Look,
instead of borrowing the money (directly from Magill),
we'll use the money for collateral for another loan.”
The article described the logistics of the Magill “money
wash” as follows:
On July 25, 1972, [the plaintiffs] picked up the
$200,000 from Magill. The next day, Francell
drove to Toronto with the money. Gordon flew
there. Together, they entered the offices of
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Toronto attorney Joseph Burnett, who ran a
large, international real estate financing com-
pany. Francell gave Burnett the cash. In turn,
Burnett gave the Pine Knob partners a $200,000
loan, the check drawn on one of Burnett's com-
panies, thus hiding Magill’s role in the transac-
tion. While the transaction was legal, it was highly
unorthodox ... . {Emphasis supplied. |
The final part of the article discussed the links
between “people involved in laundering the $200,000
Magill loan” and the murders of Agnes Brush and
Harvey Leach. It noted that “Locricchio and Francell . . .
are puzzled by the coincidences. But they say they are
only coincidences.”
C The Third Article: “The Pine Knob Story: A Brush
With Bankruptcy.”
The third article in the series appeared under the
above headline. It focused on the financial problems the
plaintiffs experienced in 1975, partly as a result of FBI
harassment, and detailed that the plaintiffs had
obtained loans from a number of reputed organized
crime figures. The article asserted that “[t]he partners
were even overdue in paying their accountants” and
quoted Locricchio as lamenting, “‘We couldn't get any
financing through banks. We were up to here.” It con-
tinued by stating that “[t]he financial difficulties were
but part of their troubles, say Locricchio and Francell.
At this time the FBI showed up to tell them they were
going to be indicted [regarding the $200,000 Magill
loan].”
The article pointed out that a federal grand jury ulti-
mately indicted the plaintiffs for “lying about the Magill
loan on a mortgage application from a federally insured
bank” in 1977. The plaintiffs pleaded guilty and were
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fined $500. The article stated that “[i]t is the only time
either man has been convicted of a crime.”
The article also described how Locricchio had
secured a bid from reputed organized crime figures
James Tamer and Charles Goldfarb to construct a “Pine
Knob-like” music theatre at the Aladdin Hotel in Las
Vegas. The article stated that “Locricchio estimated
construction costs [of the music theater] at $6 million
. {i]t ended up costing $10 million.” It quoted an affi-
davit from the 1978 indictment of Goldfarb and Tamer
on charges to illegally control the Aladdin's gambling
casino “as claiming that Locricchio was secretly offered
a ‘piece’ of the Aladdin in exchange for his [construc-
tion} work on the music theater.” It also referred to
unnamed sources who claimed that “the FBI questioned
whether the $4 million cost overrun was possibly an
illegal ‘bonus’ to Locricchio,” and described how the FBI
tried to get Locricchio to serve as a “snitch” against
suspected organized crime involvement in the Aladdin
hotel's gambling casino, an offer which he refused.
D. The Fourth Article: “The Pine Knob Story: Part-
ners Stalked By Mafia-Hunters.”
The final article in the series appeared under the
above headline. Despite the headline, this article really
had little to do with stalking by “Mafia-hunters.” The
article actually began on an upbeat note, asserting that
“{t]he owners of Pine Knob entertainment complex .. .
are bouncing back from near bankruptcy and a public
impression they are ‘Mafia.’” It quoted Locricchio as
boasting, “We ain't the Rock of Gibraltar yet ... [but the
Pine Knob facilities] are so strong that in spite of all
(the problems), we're going to overcome. There’s no
doubt now.”
The article wert on to note that the Pine Knob com-
plex turned a $700,000 profit in 1977-78. It quoted
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Locricchio as chalking up the FBI attention to “his
Sicilian heritage and his business success.” Locricchio
conceded close acquaintances with numerous “alleged
Mafia members,” but contended that the government
harassment because of these acquaintances amounted
to guilt by association. The rest of the article described
the relationship between the partners. It ended by
noting that the “partners worry that the intensive law
enforcement investigations into their activities over the
last eight years will continue to haunt them.”
II.
PROCEDURAL HISTORY
Four important events, outlined as follows, chart the
procedural history of this case: the pretrial denial of
summary judgment, the trial on the merits, the trial
court's directed verdict, and the Court of Appeals
reversal of the directed verdict.
A. The Trial Court And Court Of Appeals Denials Of
Summary Judgment.
The plaintiffs’ original and subsequent amended com-
plaints alleged “[t]hat by the entire tenor of these pub-
lications, Defendants acted in reckless disregard of the
falsity of their publications and said ... that Plaintiffs
Locricchio and Francell were persons engaged in orga-
nized crime and engaged in a continuing course of crim-
inal misconduct or conduct of an immoral or
reprehensible nature in both their personai and busi-
ness relationships.”
The plaintiffs’ complaints did not identify a single
false statement that appeared in the Pine Knob articles.
The defendants moved for summary judgment before
trial. They contended that the absence of aliegations of
specific false statements in the complaint negated any
issue of material fact. The trial court denied the motion.
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Rebuked by the denial of summary judgment, the
defendants countered with a number of interrogatories
that asked the defendants to identify each alleged false
statement in the Pine Knob series. The plaintiffs
responded tersely:
[T]he defamation allegations contained [in the
complaint] are not necessarily based on a false
statement(s) in any one particular article, but
rather, ... the entire series of articles ... injured
the reputations of plaintiffs as the same repre-
sented a false portrayal, implication, imputation
and/or insinuation ...
Unsatisfied with this response, the defendants once
again moved for summary judgment on the plaintiffs’
libel claims, rearguing that no genuine issue of material
fact existed because of the failure of the plaintiffs to
allege any specific false statements of fact. Once again,
the trial court disagreed, and denied defendant's sum-
mary judgment motion.
The Court of Appeals granted leave on interlocutory
appeal to resolve the issue and issued its opinion in
August 1983.5 The Court of Appeals rejected the argu-
ment that the absence of specific allegations of false
statements of fact mandated dismissal on summary
judgment. The Court of Appeals relied on three cas te
reach this conclusion: Sanders v Evening News Ass'n, 313
Mich 334, 340; 21 NW2d 152 (1946), Caldwell v Crowell-
Collier Publishing Co, 161 F2d 333, 335-336 (CA 5, 1947),
cert den 332 US 776 (1947), and Memphis Publishing Co v
Nichols, 569 SW2d 412, 419-420 (Tenn, 1978).
From Sanders, the Court of Appeals extracted the
maxim that “‘[t]o test its libelous quality, a publication
8 This Court subsequently denied interlocutory appeal, and the
United States Supreme Court denied certiorari.
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is to be considered as a whole, including the character
of the display of its headlines when the article is pub-
lished in a newspaper, and the language employed
therein.” /d. at 340. From Caldwell and Nichols, the
Court of Appeals extrapolated the proposition that
“{i]Jnsinuation, imputation or inference may be as
defamatory as a direct, unveiled assertion.” Having thus
affirmed the theoretical validity of a cause of action for
defamation by implication, the Court of Appeals held
that “[t]he pleadings give rise to a genuine issue of
material fact which is to be left to the trier of facts and
cannot be disposed of by summary judgment, and
remanded the case for trial.
B. The Trial.
The case proceeded to a sometimes vitriolic trial. One
of the most controversial trial issues involved the
authenticity and veracity of the tapes and transcripts
from the Detroit News’ interview of the plaintiffs in
1979.9 The plaintiffs controverted many of the quotes
from the taped interview that appeared in the Pine Knob
series. The tape apparently had very poor sound quality
and much contention reigned during the trial over what
the plaintiffs had actually said or not said on the tape.
Reporter Michael Wendland, the lead author of the
Pine Knob series, provided crucial testimony at trial. At
the time of the trial, the law required a private plaintiff
suing a media defendant on a report of public interest
to prove actual malice.’ Accordingly, much of Wend-
9 The reporters had agreed to provide the plaintiffs and their
attorney a duplicate copy of the taped interview. At trial, the plain-
tiffs contended that Detroit News had actually provided a blank
copy.
10 Our decision in Rouch v Enquirer & News of Battle Creek, 427
Mich 157; 398 NW2d 245 (1986), subsequently rejected the actual
malice standard of liability in private-figure public-interest cases.
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land’s cross-examination targeted his state of mind
regarding the truth of his factual reporting. Specifically,
the plaintiffs’ attorneys attempted to show that Wend-
land did not personally believe either that Locricchio
and Francell were actually organized crime members or
that Pine Knob was Mafia-owned.
On cross-examination Wendland testified, “I dont
think there’s organized crime involvement in the owner-
ship of Pine Knob. | think organized crime has been
involved in... helping your clients finance Pine Knob,
and | also testified | domt think your clients are orga-
nized crime members.”
Wendland also testified that he did not use the term
“money wash” regarding the $200,000 Magill loan to
impute illegality, but rather to convey that “[the loan]
was obscuring the source of the funds ... what this
loan did ... was to hide the source of the money. And
that is certainly unusual. That’s a money wash.”
The plaintiffs’ trial attorney also tried assiduously to
show that the Vine Knob series contained factual inaccu-
racies Or omissions. He ultimately secured two admis-
sions from Wendland regarding factual inaccuracies.
First, Wendland conceded that the second Pine Knob
article erroneously stated that a “score of police agen-
cies” had investigated the plaintiffs regarding the Leach
and Brush murders. Wendland could in fact name only
fourteen, not twenty agencies, that had investigated the
Leach/Brush murders, including three federal grand
juries and the Internal Revenue Service. Wendland ex-
plained, “We use [the phrase ‘a score’ ] | think, a lot, you
know, meaning a great many, certainly more than a few.
Second, Wendland conceded inaccuracy regarding the
picture of Harvey Leach’s car under the caption,
“Harvey Leach’s car was found with his body in the
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trunk,” that appeared in the second article. Wendland
testified the caption “should have said -— | mean, that
makes it sound like it happened today, and my gripe
was that it should have said in 1974"
Wendland stood by the factual accuracy of the rest of
the series. He conceded that the question printed
throughout the articles, “Is it Mafia?” arguably referred
to the plaintiffs whose names were synonymous with
Pine Knob. However, when asked if the articles ever
stated an answer to the question “Is it Mafia?” Wend
land replied
I think all four articles answer that question
if you read your client's response to this
constant attention, constant rumors, you ll see
them saying, “No, we are not Mafia iMly job
is to report the facts, put all the facts out there
for people to make up their mind. And that’s
what we did in this story. [The plaintiffs] over
and over again, point it out how these rumors
have pervaded over their whole lives and how
these rumors are not true
{
Pressed by his cross-examiner about the accuracy of
the statement attributed to Locricchio in the Pine Knob
series “that {a hypothetical organized crime diagram]
drawn by police agencies, as well as his Sicilian her-
itage. has unfairly put the sign of the Mafia on Pine
Knob,” Wendland replied that the statement comprised
not a direct quote, but rather [an accurate] “paraphrase
of the entire discussion” with the plaintiffs
The plaintiffs’ attorney tried also to show falsity in
the first Pine Knob article's assertion that *|s!everal
investors associated with organized crime either
lent or helped Locricchio and Francell raise large sums
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of money... .”. Wendland refused to concede this
statement contained material falsity, explaining that
at the very start ... when [the plaintiffs] first
bought Pine Knob, one of the parties who owned
it was a guy named Arthur Rooks. | think another
owner was Alex Kachinko. Both of those people
were associated with organized crime, and [the
plaintiffs] bought Pine Knob from those people.
* * *
[Pine Knob] was sold, | think, for a little over a
million dollars on a land contract. In effect, Mr.
Rooks, [Mr.] Kachinko ... became the bankers
They held the land contract. I’m interpreting that
to mean, in effect, they lent [plaintiffs] the
money .... As the holder of the land con-
tract, they had a very strong interest in Pine
Knob ... [the term “lent” ] fit into that more than
anything else. That's probably not entirely accu-
rate, but it was — in effect, they ended up being
owed money, lending money, they had an
interest in it.
The plaintiffs’ expert, one Professor Robert Bjork, a
doctor of cognitive psychology at UC.L.A., also provided
crucial testimony at trial. The plaintiffs’ attorney asked
Dr. Bjork whether “the typical readers [of the Pine Knob
series would] associate my clients, Mr. Locricchio and
Mr. Francell, with [the murders of Agnes Brush and
Harvey Leach]?” Bjork replied:
| believe they would end up thinking that
somehow those murders are related somehow to
the financial goings-on. | don't believe they would
[necessarily] conclude [that] Mr. Locricchio and
Mr. Francell were involved personally in some
way.
~
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The plaintiffs’ attorney also asked Professor Bjork’s
opinion regarding “whether or not the four [Pine Knob]
articles ... when read by a typical reader, created an
impression that Mr. Locricchio and Mr. Francell are
associated with organized crime?” Bjork replied, “In my
opinion ... the typical reader would end up thinking
that Mr. Locricchio and Mr. Francell have some kind of
connection with organized crime.” (Emphasis supplied )
For their part, the defendants essentially mounted a
defense of truth against the plaintiffs’ libel allegations.
The defendants tried to demonstrate throughout the
trial that the plaintiffs did in fact have numerous ties to
individuals with organized crime backgrounds, that
rumors of organized crime ties to Pine Knob originated
long before the publication of the Pine Knob series, and
that the articles contained no material falsehoods or
omissions of fact.
At the conclusion of the proofs, the trial court in-
structed the jury that “[i]t is the Plaintiffs’ burden of
proof to satisfy you by a preponderance of the evidence
that the statements or innuendoes complained of were
false in some material respect and published with
actual malice.!"! Plaintifts will not have satistied their
burden of proving material falsity if you find that the
Detroit News articles were substantially true.” The
defendants moved for a directed verdict, which the trial
court took under advisement pending the jury’s return
of a verdict.
The jury returned special verdicts in September 1985.
It found in respect to plaintiff Francell that the Detroit
News published the articles, that the articles contained
false and defamatory statement(s), and that the defen-
dants had knowledge that the statement was false or
Al See n 10.
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acted with reckless disregard regarding its falsity. The
jury awarded Francell three million dollars in actual
damages. With respect to plaintiff Locricchio, the jury
awarded no damages after finding no publication, i.e.,
that the defendants did not disseminate-false and
defamatory facts to a third party through printing,
writing, or pictures.
C The Trial Court's Directed Verdict.
The trial court ruled on the defendant’s motion for a
directed verdict in December 1986. It approvingly cited
the newly released Supreme Court decision in Philadel
phia Newspapers, Inc v Hepps, 475 US 767; 106 S Ct 1558:
89 L Ed 2d 783 (1986). From Hepps, the trial court extra-
polated that “[w]here allegedly defamatory speech is of
public concern, the First Amendment demands and ~
Michigan law requires that the plaintiff, whether public
official, public figure, or private individual, prove the
statements at issue to be false.” The trial court then
held that “the plaintiffs have failed to prove the publica-
tions at issue contained significantly false facts, and a
verdict must be directed for the defendant.”
The trial court further stated that “[i]nsinuation,
imputation, or inference may be as defamatory as a
direct unveiled assertion.” The trial court nevertheless
concluded that “liability cannot be imposed for journal-
istic inferences arising from the reporting of true facts
about matters of public interest and concern. The plain-
tiff must prove the faise impression arises from untrue, >
or undisclosed facts.”
The trial court then compiled a fourteen-paragraph list of
facts that it found “are true; or at least, [that] the plaintiffs
have not proven them to be false.” The court concluded:
“{1] Plaintiffs purchased Pine Knob from
individuals who had been indicted by a federal
ee ee
A-19
grand jury for concealing their ownership inter-
ests in a Las Vegas hotel.
“{2] Plaintiffs’ names appeared on the organized
crime lists of the Federal Bureau of Investigation.
“{3] Plaintiffs were personal friends of, or
had done business with, innumerable individuals
whose names are commonly associated with
organized crime, including Leonard Schultz,
Dominic Corrado, Joseph Burnett, Fred Gordon,
James Tamer, Charles Goldfarb, Harvey Leach,
Charles Monazym and Jack Tocco.
“{4] In the course of their investigations,
agents of the Federal Bureau of Investigation
spoke with plaintiffs’ bankers and referred to
plaintiffs as ‘crooks.
“{5] <A federal grand jury indicted plaintiffs
on three counts of filing false statements on a
loan application made to Detroit Bank & Trust.
“{6] Plaintiffs pleaded guilty in federal court
to giving false information on an application for
a loan, in violation of Federal law.
“{7] The bulk of the financing required to
develop Pine Knob occurred after the publica-
tion of the 1972 Detroit News Article that plain-
tiffs claim caused ‘all their problems.
“{8] Plaintiffs’ names surfaced in the investi-
gations of both the Agnes Brush and Harvey
Leach murders. The Detroit News, in its coverage
of those two investigations, never identified
plaintiffs as suspects, but the Detroit News did
identify (at that time and in the 1979 series) a 61
year old laborer as the only suspect in the Agnes
Brush murder.
A-20
oe
“{9] Plaintiffs told the Federal Bureau of
Investigation in 1973 that they were already then
tired of hearing rumors that organized crime was
connected with their business.
“{10] Plaintiffs furnished a legal memorandum
and statements by their attorneys confirming for
The Detroit News their allegations that the Fed-
eral Bureau of Investigation had harassed them
by visiting their lenders and bankers from 1973
through 1977.
“{1l] Joseph Locricchio admitted in previous
testimony and in this trial that he knew of the
Federal Bureau of Investigation’s special interest
in James Tamer and of the agency's investigation
into hidden ownership of the Aladdin Hotel and
Casino before he went to Las Veyas at James
Tamer’s request.
“[12] Despite speculation to the contrary, the
only evidence on record shows plaintiffs were
turned down in 1976, well before the complained
of publications, for loans because of ‘high living,
a reputation that they were not prompt with pay-
ment of their debts, and rumors of organized
crime involvement. No evidence has been intro-
duced, and no banker has testified that they
relied on the complained of publications in
turning down plaintiffs’ loan applications.
“{13] Plaintiffs admit a separation between
themselves and their primary lender, Borg
Warner, for acts prior to May, 1978 and resulting
legal actions in which plaintiffs attributed mil-
lions of dollars in damage to the businesses to
Borg Warner.
“{14] Plaintiffs admit filing a lawsuit against
the Hilton Hotel chain, The Reminder Newspaper,
A-21
and several individuals, blaming them for the
defeat of the referendum that would have
allowed plaintiffs proposed hotel and for causing
plaintiffs $ 100,000,000 in damages.”
D. The Court Of Appeals Reversal Of The Directed
Verdict.
The plaintiffs appealed the trial court's ruling, and
the Court of Appeals issued a two-page opinion over-
turning the trial court and reinstating the jury verdict
in February 1989. In the view of the Court of Appeals.
[t]he legal question in this case was whether
plaintiffs could have a cause of action for libel
where their allegations of defamation were not
based on a specific false statement in any partic-
ular article.
[he Court reversed the trial court's directed verdict
because, “[o]ur first opinion in this case answered that
question affirmatively.”
The Court of Appeals further opined that “the United
States Supreme Court's decision in Philadelphia Newspa-
pers, Inc, supra, [does not] bar[] a suit for defamation
by implication.” The Court of Appeals held accordingly
that “[iJn light of our previous opinion and our belief
that subsequent law has not eliminated defamation by
implication, we reverse the trial court’s order granting
[the directed verdict] and reinstate the jury's verdict.”
[Il
ANALYSIS
A. The Law Of The Case Doctrine, Libel Verdicts,
And Independent Appellate Review.
The trial court, in effect, independently reviewed ihe
record to determine whether the jury's verdict con-
A-22
formed to the constitutionally mandated burden of
proof regarding falsity. In contrast, the Court of Appeals
implicitly relied on the law of the case doctrine to
reverse the trial court’s directed verdict by adverting to
its prior summary judgment ruling that a cause of
action exists for defamation by implication. This Court
noted in CAF /nvestment Co v Saginaw Twp, 410 Mich
428, 454; 302 NW2d 164 (1981), that the law of the case
doctrine.
[als generally stated, [provides that] if an appel-
late court has passed on a legal question and
remanded the case for further proceedings, the
legal questions thus determined by the appellate
court will not be differently determined on a
subsequent appeal in the same case where the
facts remain materially the same.
The law of the case doctrine exists primarily to
“maintain consistency and avoid reconsideration of mat-
ters once decided during the course of a single contin-
uing lawsuit.” In this sense, the law of the case
doctrine is an analytical cousin of the doctrines of
claim and issue preclusion. However, as Justice Holmes
recognized aimost a century ago, unlike the later doc-
trines, the iaw of the case doctrine “merely expresses
the practice of courts generally to refuse to reopen
what has been decided, not a limit to their power.”®
We do not here question the generally sound princi-
ples of efficiency, comity, and finality that animate the
l2 Wright, Miller & Cooper, Federal Practice & Procedure,
$4478, p 788.
13 Messenger v Anderson, 225 US 436, 444; 32 S Ct 739; 56 L Ed
1152 (1912). See also Safir vy Dole, 231 US App DC 63; 718 F2d 475
(1983) (the law of the case doctrine is discretionary and does not
preclude courts from reéxamining issues that address their consti-
tutional power).
A-23
law of the case doctrine. However, in a libel case
affecting constitutionally protected public discourse,
the law of the case doctrine should not have precluded
a second review by a subsequent Court of Appeals
panel. Indeed, in such cases the law of the case doc-
trine must yield to a competing doctrine: the require-
ment of independent review of constitutional facts."
The determination on summary judgment that the
plaintiffs’ complaint stated a cause of action for defama-
tion by implication should not have abrogated the
appellate court's duty to independently review the
record to determine whether, in fact, the plaintiffs car-
ried their burden of proof at trial regarding falsity at
the posttrial directed verdict stage." The application of
the law of the case doctrine in this case clearly contra-
vened the principle enshrined in the celebrated case of
New York Times v Sullivan, 376 US 254, 270: 84S Ct 710
11 L Ed 2d 686 (1964), that discourse on matters of
public interest should remain “uninhibited, robust. and
wide-open ...
Sullivan announced that appellate courts must con-
duct an independent review of the record to ensure that
no “forbidden intrusion’ on the field of free expression”
has occurred in libel cases involving the issue of actual
malice. /d. at 285."® Sullivan mandated that reviewing
Harte-Hanks Communications, Inc vy Connaughton, 491 US 657.
688; 109 S Ct 2678; 105 L Ed 2d 562 (1989). “In determining
whether [a] constitutional standard has been satisfied. the reviewing
court must consider the factual record in full.”
IS in any event, the law of the case doctrine does not bind this
Court upon review of a decision of the Court of Appeals.
16 The actual malice standard of Sullivan requires a public
figure or official to first establish a false utterance, and, second, to
prove that “it was [made] with reckless disregard of whether it was
false or not.” 376 US 280.
A-24
courts in libel cases “‘examine for [themselves] the
statements in issue and the circumstances under which
they were made to see ... whether they are of a char-
acter which the principles of the First Amendment ...
protect.” /d
The Supreme Court strongly reiterated the require-
ment of independent review in Bose Corp v Consumers
Union of the United States, Inc, 466 US 485, 505, 5i4:
104 S Ct 1949; 80 L Ed 2d 502 (1984). Bose held that
“the clearly erroneous standard of Rule 52(a) of the
Federal Rules of Civil Procedure does not prescribe
the standard of review to be applied in reviewing a
determination of actual malice in a case governed by
New York Times v Sullivan.” The Bose Court reasoned
that “the question whether the evidence in the record
in a defamation case is of the convincing clarity
required to strip the utterance of First Amendment
protection is not merely a question for the trier of
fact. Judges, as expositors of the Constitution, must
independently decide whether the evidence in the
record is sufficient to cross the constitutional thres-
hold that bars the entry of any judgment that is not
supported by clear and convincing proof of ‘actual
malice.” /d. at 511.
Similarly, in Harte-Hanks Communications, Inc v Con-
naughton, 491 US 657, 686; 109 S Ct 2678; 105 L Ed 2d
962 (1989), the Supreme Court reviewed the entire
record to determine if the evidence supported a finding
of actual malice. The Court reaffirmed that “the ques-
tion whether the evidence in the record in a defamation
case is sufficient to support a finding of actual malice is
a question of law.” /d. at 685. The Court reiterated that
“fojur profound national commitment to the free
exchange of ideas, as enshrined in the First Amend-
ment, demands that the law of libel carve out an area of
‘breathing space’ so that protected speech is not dis-
couraged.” /d. at 686."
7 Certainly, the Harte-Hanks Court “construed the consti-
tutional mandate of independent appellate review very narrowly” as
compared to Bose and Sullivan. Rassel, Stewart & Niehoff, Con-
naughton v Harte-Hanks and the independent review of libel verdicts,
20 U Tol L R 681, 694 (1989).
The concurring opinion of Chief Justice CAVANAGH advances
Harte-Hanks for the proposition that appellate courts “need not
independently review ‘the historical facts — e.g., who did what to
whom and when... .” Post, pp 136-137, citing the concurring
opinion of Justice White. Initially, it must be said that our reading
of Harte-Hanks does not find that “four concurring justices made
explicitly clear” that they agree with Justice White's concurrence. In
any event, even Justice White, with whom Chief Justice Rehnquist
alone concurred conceded that the “reckless disregard component
of the ... ‘actual malice’ standard is not a question of historical
fact.” /d. at 694. (Emphasis supplied. )
Second, appellate analysis of actual malice in libel cases neces-
sarily involves a thre shold determination of falsity, since proof of
actual malice re quires proof of both falsity and reckless disregard
of falsity. Third, in reviewing a libel verdict an appellate court does
not and should not exercise review of credibility determinations,
disregard previous factfindings, or create new factfindings. Rather,
the court should exercise independent judgment regarding whether,
as a matter of constitutional law the evidence in the record sup-
ports the verdict. The Court of Appeals in this case failed to per-
form an independent evaluation of the evidence in accordance with
the constitutional principles enumerated in this opinion.
The trial court, in contrast, clearly conducted an independent
review of the existing record. The concurrence suggests that inde-
pendent review of the burden of proving falsity inherently involves
reviewing credibility of witnesses. Yet the record emphatically
demonstrates that the trial court did not examine credibility in its
independent review of the jury’s verdict. Its evaluation concerns not
primarily “who did what to whom and when,” but whether a consti-
tutionally permissible quantum of evidence supported a judgment
consistent with libel law and First Amendment principles. As the
Bose Court noted, “the rule of independent review assigns to judges
a constitutional responsibility that cannot be delegated to the trier
of fact, whether the factfinding function be performed in the par-
ticular case by a jury or a trial judge. 466 US 501; see also Time v
‘ape, 401 US 279, 284; 91 S Ct 633; 28 L Ed 2d 45 (1971): “[I]n
cases involving the area of tension between the First and Fourteenth
Amendments on the one hand and state defamation laws on the
(concluded on page A-26)
A-26
We recognize that, unlike the instant case, the cases
from Sullivan to Harte-Hanks involved public figures and,
accordingly, mandated independent review for the issue
of actual malice. In Gertz v Welch, 418 US 323; 94 S Ct
2997; 41 L Ed 2d 783 (1974), the Court held that the
actual-malice standard of liability for actual damages
articulated in Sullivan does not govern cases, such as
the instant one, that involve a media defendant’s report
on a matter of public interest concerning a private-
figure plaintiff.
However, in Philadelphia Newspapers v Hepps, supra at
768-769, the Supreme Court held that “where a news-
paper publishes speech of public concern, a private-
figure plaintiff cannot recover damages without also
showing that the statements at issue are false.” In abro-
gating the common-law presumption of falsity in libel
cases, the Court in Hepps created an issue of consti-
tutional fact regarding whether a plaintiff carries the
burden of proving falsity.
We therefore conclude that an independent appellate
review of the burden of proof with regard to falsity in
private-figure, public-interest cases deters “forbidden
intrusion on the field of free expression” as a logical
corollary to independent review of actual malice. Sul-
livan, supra at 285. The Court recognized in Hepps, that
imposing liability for true statements amounts to the
imposition of liability without fault proscribed by Gertz.
A jury verdict against the great weight of the evidence
(continued from page A-25)
other, we have frequently had occasion to review ‘the evidence in
the ... record to determine whether it could constitutionally sup-
port a judgment’ for the plaintiff.” The task of the reviewing appel-
late court in a libel case is not to conduct an inquiry regarding who
did what to whom, but rather to independently examine the record
as a whole to insure that the burden of proof with respect to falsity
has been satisfied.
A-27
regarding the falsity requirement, unreviewed by a
court, would therefore comprise a forbidden intrusion
on protected speech, in the same way as would a failure
to review for clear and convincing evidence of actual
malice.'8
In Rouch v Enquirer & News of Battle Creek, 427 Mich
157; 398 NW2d 245 (1986), this Court, following Gertz,
ejected the actual-malice standard of liability in cases
involving private-figure plaintiffs and a media defen-
dant’s report on matters of public interest.'? Our ratio-
nale in Rouch in part rested on an acknowledgement of
the “even greater protection” afforded defamation defen-
dants by the burden of proof as to falsity. /d. at 198.
That protection would indeed ring hollow if, at least in
cases implicating public-interest subject matter and
media defendants, no effective review existed to ensure
compliance with the burden of proof.?° The Court of
18 The logic of Anderson v Liberty Lobby, Inc, 477 US 242, 252:
106 S Ct 2505; 91 L Ed 2d 202 (1986), supports this reasoning. In
Anderson, the Court was “convinced that the inquiry involved in a
ruling on a motion for summary judgment or for a directed verdict
necessarily implicates the substantive evidentiary standard of proof
that would apply at the trial on the merits. ... The judge’s
inquiry, therefore, unavoidably asks whether reasonable jurors could
find by a preponderance of the evidence that the plaintiff is enti-
tled to a verdict ... .” (Emphasis added.)
19 Rouch designated negligence as the applicable standard of
liability for actual damages in such cases. The standard of liability
is thus now settled law in Michigan and not at issue in this case.
20 It is worth noting in this connection that the doctrine of
independent review reflects an inherent distrust of allocating unlim-
ited decisional power to juries in the First Amendment context.
Thus, “much of contemporary first amendment doctrine, theory,
and commentary is devoted to protecting speech from the jury. .. .
The common wisdom is that if juries were given more decisional
power in [First Amendment cases], either by increasing the range of
issues they could consider or by granting juries greater immunity
from appellate review, free speech would suffer a crippling blow.”
Schauer, The role of the people in First Amendment theory, 74 Cal L R
761, 765 (1986).
A-28
Appeals application of the law of the case doctrine
accordingly fails to accord the necessary “breathing
space” to protected speech. The principle of indepen-
dent review logically extends to determining whether a
plaintiff satisfies her burden of proving falsity. /d.
A remand in this case of plaintiffs’ libel claims for fur-
ther proceedings on the merits would normally flow
from our determination that the Court of Appeals erred
in relying on the law of the case doctrine to reverse the
trial court.*! However, in the interest of clarifying the
operation of constitutional principles under the facts of
this case, of judicial economy, and of the long-suffering
litigants, we bypass this customary procedure and con-
duct an independent review and analysis of the record
in the foliowing sections.
B. Analysis Of The Plaintiffs’ Defamation Claims.
An analysis of the plaintiffs’ defamation by implication
claims requires an examination of three interlocking fac-
tors: the elements of libel under Michigan law, consti-
tutional requirements and principles informing and
attenuating Michigan libel law, and the contours of
defamation by implication as shaped by the two pre-
ceding factors. Our examination of the legal principles of
libel law in Michigan, as informed by the First Amend-
ment, leads us to conclude that defamation by implica-
tion in private-figure/public-interest media cases
requires proof of both defamatory meaning and falsity, a
burden not carried by plaintiffs under these facts.
ame
21
Amicus curiae, Michigan Tria! Lawyers Association, incor-
rectly suggest that Bufalino v Detroit Magazine, Inc, 433 Mich 766;
449 NW2d 410 (1989), mandates a remand in this case. The Bufalino
majority acknowledged explicitly that “[w]Je can, as a practical
matter, simply decide the merits of the issue on the basis of the
record before us.” Id. at 774. Moreover, unlike Bufalino, a summary
judgment case, the instant case comes before us after extensive pre-
trial and posttrial arguments.
A-29
| The essential elements of libel: defamatory
meaning and falsity.
Michigan law has traditionally defined a defamatory
communication as one which “‘tends so to harm the
reputation of [persons so] as to lower [them] in the esti-
mation of the community or to deter [others] from asso-
ciating or dealing with [them].’” Nuyen v Slater, 372 Mich
654, 662, n *; 127 NW2d 369 (1964). A cause of action for
libel encompasses four components: 1) a false and
defamatory statement concerning the plaintiff, 2) an
unprivileged communication to a third party, 3) fault
amounting to at least negligence on the part of the pub-
lisher, and 4) either actionability of the statement irre-
spective of special harm or the existence of special
harm caused by publication. A cause of action for libel
requires a plaintiff to show defamatory meaning as well
as falsity, fault, and publication.
Michigan law has also long recognized that the
regime of libel law may not impose damages for injuries
to reputation arising from a press report of materially
true facts about a public figure on a matter of public
interest. In Sanders v Evening News Ass'n, supra at 337, a
former judge of the Common Pleas Court sued the
Detroit News for two newspaper articles that exposed
“the problem of overnight releases of persons arrested
for misdemeanors — releases made by the police at the
telephoned request of judges.” Both articles reported
an incident where the plaintiff personally intervened to
order the release of a person held in custody at a
police station. The first article reported that “‘former
Judge Joseph Sanders walked into Bethune Station one
night, banged his gavel on the startled sergeant’s desk,
and shouted: “‘Court’s in session, the Honorable Joseph
Sanders presiding. Bring in Joe Doakes!”””
A-30
The second article, appearing the following day,
stated that “‘[there has almost always] been a judge or
two, bound to a bondsman or lawyer or either by affec-
tion or campaign contribution, or overimpressed by
judicial prerogatives, who has turned the order (of the
head of the police department not to release on tele-
phone request) into a farce. Witness the case of ... the
impromptu court session held in Bethune Station by
former Judge Joseph Sanders.” /d. at 339.
The Sanders Court reviewed the record and con-
cluded that no liability existed for the first article
“because in his amended declaration plaintiff admits
the truth of the ... publication in so far as it could pos-
sibly tend to support an action for libel. Since that pub-
lication was true, it was not libelous.” /d. at 340.
The Court then reviewed the substance of the second
article, under the venerable principle that “‘[t]o test its
libelous quality, a publication is to be considered as a
whole, including the character and display of its head-
lines when the article is published in a newspaper .
/d. The Court first held that the plaintiff lacked
authority to hold court in a police station to release a
prisoner, and therefore had acted in his private, not
official capacity. It concluded that “[i]n doing so plain-
tiff acted without lawful authority and it was not
libelous for defendants to publish an article to that
effect... [f]urther, it was not libelous to say in the
alternative of plaintiff ‘or (he was) over-impressed by
judicial prerogatives’ since such appears to be the truth
from plaintiff's own pleading.” /d. at 342-343.
The logic of Sanders, while instructive, does not fore-
close every cause of action for defamation by implica-
tion. However, the Sanders rationale does prohibit
imposing liability on a media defendant for facts it pub-
A-31
lishes accurately and without material factual omissions
about public affairs.
2. Constitutional liability requirements: public dis-
course, private plaintiffs, and the burden of falsity.
In addition to satisfying Michigan libel law elements,
this private-figure/public-interest subject matter libel
case must also comply with the constitutional elements
of libel law, including falsity and the burden of proof. The
common-law roots of defamation have been fundamen-
tally altered by a series of cases from the highest court
in the land, beginning with Sullivan, supra. The Supreme
Court's First Amendment analysis of libel cases since Sul-
livan has variously employed three important factors to
define the parameters of libel liability: the public- or pri-
vate-figure status of the plaintiff, the media or nonmedia
status of the defendant,”* and the public or private char-
acter of the speech. The Court has most consistently
interpreted the First Amendment to accord maximum
protection to public speech about public figures.*3
22 . . .
“* It can hardly be disputed that the Supreme Court has rarely
“breathed life into the [First Amendment’s] press clause [so as to
provide| the outlines of a press-speech distinction.” Note, Press to
trial: The press clause, the libel dilemma, and the media-nonmedia dis-
tinction, 39 Syracuse L. R 795, 812 (1988). Nevertheless, much of the
Court's libel jurisprudence has unequivocally sought to constrain
publishers from imposing anti-free speech “self-censorship.”” Sui.
ivan, 376 US 279. See, e.g., Gertz, 418 US 247 (explicitly restricting
its holding to media defendants), Hepps, 475 US 779, n 4 (“Nor
need we consider what standards would apply if the plaintiff sues a
nonmedia defendant” ). See also note, Philadelphia Newspapers v
Hepps, revisited: A critical approach to different standards of protection
for media and nonmedia defendants in private plaintiff defamation cases
58 Geo Wash L R 1268, 1281 (1990): “[Ajlthough the [Supreme]
Court has never clearly embraced the media-nonmedia distinction,
it has never explicitly rejected it either.”
23 See, e.g., Hepps at 775. “When the speech is of public con-
cern and the plaintiff is a public official or public figure, the Con-
stitution clearly requires the piaintiff to surmount a much higher
barrier before recovering damages from a media defendant than is
raised by the common law.”
A-32
The Court has acted more ambiguously in the context
of private-figure plaintiffs, as presented in this case. In
Gertz, the Court focused on the status of the plaintiff
and concluded that private-figure plaintiffs deserve
more reputational protection than do public-figure
plaintiffs for two reasons. First, the Court postulated
that unlike public figures, private-figure plaintiffs lack
access to “channels of effective communication” that
would allow them “a more realistic opportunity to coun-
teract false statements . ...” /d. at 344. Second, unlike
public figures, private-figure plaintiffs do not voluntarily
expose themselves to the risk of defamation by
injecting themselves into public controversy. The Court
concluded that “[p]rivate individuals are therefore
more vulnerable to injury, and the state interest in pro-
tecting them is correspondingly greater.” /d.
Just as the Court has postulated that private-figure
plaintiffs deserve greater libel law protection vis-a-vis
public-figure plaintiffs, it has also consistently recog-
nized that speech on matters of public concern merits
heightened protection under the First Amendment. The
Court has declared, for example that the First Amend-
ment “embraces at least the liberty to discuss publicly
. all matters of public concern.”*4 and similarly that
“expression on public issues ‘has always rested on the
highest rung of the hierarchy of First Amendment
values.’”?5
The Court’s protection of speech on the basis of its
public character reached its zenith in the plurality
24 Thornhill vy Alabama, 310 US 88, 101; 60 S Ct 736; 84 L Ed
1093 (1940).
25. NAACP v Claiborne Hardware Co, 458 US 886, 913; 102 S Ct
3409; 73 L Ed 2d 1215 (1982). See also Thornhill, n24, supra, Rosen-
blatt, supra at 386: “There is, first, a strong [constitutional] interest
[in protecting] debate on [public issues].”
A-33
opinion of Rosenbloom v MetroMedia, Inc, 403 US 29: 91
S Ct 1811; 29 L Ed 2d 296 (1971). The plurality in Rosen-
bloom suggested that the actual-malice standard articu-
lated in Sullivan should extend to both private- and
public-figure plaintiffs if the defamatory statement
involved “matters of public or general concern.” /d. at
44. The Court repudiated this position in Gertz, and
instead focused on the plaintiff's public or private
status to set the standard of liability. However, in Hepps,
the Court again emphasized the public character of the
speech (and the danger of media self-censorship) to set
the applicable burden of proof with regard to falsity.
Similarly, in Dun & Bradstreet v Greenmoss Builders, Inc,
472 US 749, 759; 105 S Ct 2939; 86 L Ed 2d 593 (1985), the
Court emphasized that speech on matters of public con-
cern lies at the heart of the First Amendment, while,
“[{i]Jn contrast, speech on matters of purely private con-
cern is of less First Amendment concern.” While Gertz
prohibited the imposition of punitive damages in private-
figure/public-interest cases absent a showing of actual
malice, Dun & Bradstreet held that “permitting recovery
of presumed and punitive damages in defamation cases
absent a showing of ‘actual malice’ does not violate the
First Amendment when the defamatory statements do
not involve matters of public concern.” /d. at 763.
The United States Supreme Court has also “consis-
tently sought to ensure that liability does not arise from
true speech on public matters.”*6 In Sullivan, supra at
271, the Court stated unequivocally:
Authoritative interpretations of the First
Amendment guarantees have consistently
26 Note, The burden of proving truth or falsity in defamation: Set.
ting a standard for cases involving nonmedia defendants, 62 NYU LR
812, 829 (1987).
A-34
refused to recognize an exception for any test of
truth ... and especially one that puts the burden
of proving truth on the speaker.
Similarly, in Garrison v Louisiana, 379 US 64, 74; 85 S$
Ct 209; 13 L Ed 2d 125 (1964), the Court noted that
“{t]ruth may not be the subject of either civil or crim-
inal sanctions where discussion of public affairs is con-
cerned.” More recently, “[b]oth [Hepps] and [Dun &
Bradstreet] evince a special solicitude for speech of
public concern and desire to ensure such speech ade-
quate breathing space, the one by its allocation of
burden of proof, the other by its limitation on dam-
ages.”*" In parallel fashion, this Court has long recog-
nized, as in Sanders, that Michigan law prohibits libel
liability for true speech on matters of public concern.
Although the Court has stated clearly that true
speech about matters of public concern may not sub-
ject a speaker to libel sanctions, it has paradoxically
more extensively elucidated the standard of fault than it
has the quantum or quality of falsity in libel cases.** At
best, it can be said that the Court has struggled analyti-
cally to balance private reputational interests against
public free expression in the context of falsity. On the
one hand, the Court has asserted that “[flalse state-
ments of fact” are constitutionally valueless because
2 Note, The fact-opinion determination in defamation, 88 Colum L
R 809, 833 (1988).
28 See, e.g., Hepps, supra at 775: “Our opinions to date have
chiefly treated the necessary showings of fault rather than falsity.”
The actual-malice inquiry of public-figure cases generally focuses on
the actions and state of mind of the publisher rather than the
quantum of proof of falsity adduced by the plaintiff, See, e.g., Her-
bert v Lando, 441 US 153, 176; 99 S Ct 1635; 60 L Ed 2d 115 (1979)
(requiring plaintiffs in defamation actions to “focus on the editorial
process and [to] prove a false publication attended by some degree
of culpability” ).
A-35
such statements “interfere with the truth-seeking func-
tion of the marketplace of ideas, and they cause damage
to an individual’s reputation that cannot easily be
repaired by counterspeech, however persuasive or effec-
tive.”*° On the other hand, the Court has also asserted
that “(t]he First Amendment requires that we protect
some falsehood in order to protect speech that mat-
ters.” Gertz, supra at 341.
The more recent decision in Hepps clearly indicates
adherence to the latter paradigm of protecting some
degree of falsity to ensure greater First Amendment pro-
tection of speech on public interest matters. The Court
in Hepps, supra at 776, recognized that “forcing the
plaintiff to bear the burden of proving falsity [will result
in some cases where] plaintiffs cannot meet their
burden despite the fact that the speech is in fact false.”
Nevertheless, the Court ultimately concluded “that the
Constitution requires us to tip [the scales] in favor of
protecting true speech,” despite the dispositive nature
of burden of proof in cases presenting ambiguous evi-
dence regarding falsity. /d. In this connection, it seems
clear that claims of defamation by implication, which by
nature present ambiguous evidence with respect to fal-
sity, face a severe constitutional hurdle.
As noted previously, the requirement that a private
plaintiff suing a media defendant for libel in a public
interest matter would have to “prove as part of his
case, in addition to defendant's fault, that the state-
ments at issue are false” comprised an important factor
for our decision in Rouch to strip public interest state-
c
29 Hustler Magazine v Falwell, 485 US 46; 108 S Ct 876; 99 L Ed
2d 41 (1988). The Holmesian concept of the “marketplace of ideas”
plays a central role in all First Amendment jurisprudence. See, e.g.,
Abrams v United States, 250 US 616, 630; 40 S Ct 17; 63 L Ed 1173
(1919) (Hoimes, J., dissenting).
A-36
ments of heightened actual malice protection from lia-
bility. Rouch, supra at 204. However, although Hepps
“stands for the proposition that a statement on matters
of public concern must be provable as false before
there can be liability under state defamation law ...
where a media defendant is involved,” neither Hepps
(nor our decision in Rouch) specified whether the stan-
dard of proof with regard to falsity is “‘clear and con-
vincing evidence’ or some lesser standard.”*! We need
not address that issue in this case because the record
does not reveal that the plaintiffs proved any material
falsity by even a preponderance of the evidence.
C. Defamation By Implication.
1, The court of appeals analysis.
The Court of Appeals recognized that a number of
cases have held that a cause of action exists for
defamation by implication.** However, the cases it relied
on bear little relation to the case presented here. The
1947 case of Caldwell v Crowell-Collier Publishing Co,
supra, has little, if any precedential value to present
libel law or to the case at bar. In that case, Caldwell, the
Governor of Florida, sued a magazine for its editorial
contrasting Caldwell’s expressed social views on a racial
lynching in Florida to those of his counterpart governor
of North Carolina. The editorial stated:
30 Milkovich v Lorain Journal Co, 497 US . ; 110 S Ct 2695;
lll L Ed 2d 1, 18 (19990).
31 Prosser & Keeton (5th ed), Torts, 1988 supp, §1I6A, p 117.
Qc
32 As will be seen, we do not, and need not, disagree in theory
with the conclusion of the Court of Appeals that a cause of action
for libel by implication might succeed without a direct showing of
false statements. We do disagree with its failure to conduct a review
of the sufficiency of the evidence of falsity for any such libel by
implication, as did the trial court.
A-37
[Governor Caldwell] said he did not consider
{the incident] a lynching. He went on to opine
that the mob had saved courts, etc., consider-
able trouble ... thus [Governor] Cherry of North
Carolina expresses the forward-looking view of
these matters, while Caldwell of Florida
expresses the old narrow view which has been
about as harmful to southern white people as to
southern negroes [sic]. [/d. at 334.]
The federal circuit court held that Caldwell had
asserted an action for libel, noting that “[i]f the imputa-
tions published hold the Governor up as indifferent to a
lynching in his State ... they grievously reflect on him
in his office, and if false and unprivileged are actionable
per se, injury and damage being implied.” /d. at 336.
It is doubtful that the Caldwell decision comprises
good law today, and in any event its facts have little
bearing on the instant case. Caldwell involved a public-
figure plaintiff, whereas this case involves private fig-
ures. The old common-law presumption of damages no
longer controls libel cases involving public figures,
having been supplanted by the Sullivan actual-malice
requirement. Moreover, the burden of proof of falsity
now lies with the plaintiff, not with the defendant as in
Caldwell. Finally, unlike the instant case, the plaintiff in
Caldwell did in fact allege specific false statements of
fact and material omissions.
The Court of Appeais also relied on Memphis Pub-
lishing Co v Nichols, 569 SW2d 412 (Tenn, 1978), in its
summary judgment and reversal of the directed verdict
for the defendants. Nichols involved a plaintiff's suit for
libel against a newspaper that published an account of
a domestic shooting. The news account reported that
“(the shooting incident] took place Thursday
night after the suspect arrived at the [plaintiff's]
A-38
home and found her husband there with Mrs.
Nichols. Witnesses said the suspect fired a shot
at her husband and then at Mrs. Nichols, striking
her in the arm, police reported.” {/d. at 414. ]
Mrs. Nichols sued the paper, arguing that the article
“falsely implied that Mrs. Nichols and ... the assailant’s
husband, were having an adulterous affair, and were
‘caught’ by [the assailant].” The proofs at trial showed
that “not only were Mrs. Nichols [and the assailant’s
husband] at the Nichols’ home, but so, also, were Mr.
Nichols and two neighbors, all of whom were sitting in
the living room, talking, when [the assailant] arrived
around three o'clock in the afternoon.” /d.
The Tennessee Supreme Court rejected the news-
paper's argument that “every material fact in the article
quoted ... was true.” The court concluded that “[t]he
publication of the complete facts could not conceivably
have led the reader to conclude that Mrs. Nichols and
Mr. Newton had an adulterous relationship. The pub-
lished statement, therefore, so distorted the truth as to
make the entire article false and defamatory.” /d. at 420.
As in the instant case, Nichols involved a private-
figure plaintiff suing a media defendant about a matter
of public interest. However, while well reasoned, the
Nichols case incorrectly states the current law of libel
with respect to the burden of proving falsity. In Nichols
(a 1978 case), the court asserted that a plaintiff “need
not show ... that the statement is false. There is a legal
presumption of falsity which the defendant may rebut
by proving truth as a defense.” /d. at 420. As indicated
earlier, Hepps, obliterated the common-law presumption
of falsity in libel actions.
Moreover, the defamatory implication ai.eged by the
plaintiff in Nichols identified clear-cut and specific mat-
erial omissions of reported facts, in contrast to the plain-
ee
A-39
tiffs’ claims in this case. The information omitted from
the Nichols’ report damaged the plaintiffs’ reputation as
effectively as a direct false statement. The defendant's
article would have conveyed an undisputedly nondefam-
atory meaning had it reported that Mrs. Nichols’ hus-
band and other people were present during the shooting.
In contrast, in the instant case, the plaintiffs have
failed to identify or prove material omissions which, if
published, would have rendered the Pine Knob series
nondefamatory. Nichols arguably stands for the proposi-
tion that material omissions from reports of true facts
are capable of creating a defamatory impression. In the
instant case, however, the plaintiffs have not shown that
material omissions occurred or how they operated to
defame them.
Both the trial court and the Court of Appeals obliquely
referred to Herbert v Lando. 781 F2d 298 (CA 2, 1986).33
While not precisely on point, Herbert, a public-
figure/actual-malice case, is instructive with regard to the
operative significance of claims of defamation by implica-
tion. Herbert, a retired Army colonel who served in Viet
Nam, sued CBS and the Atlantic Monthly for print and
broadcast reports that cast doubt on the truth of Her-
bert’s claims that military superiors relieved him of his
command for reporting war crime atrocities.
Unlike the instant plaintiffs, Herbert specified nine
defamatory statements he claimed the defendants pub-
33 It must be noted here that no consensus exists within the
various federal circuits on the issue of defamation by implication.
See, e.g., Price vy Viking Penguin, Inc, 881 F2d 1426, 1432 (CA 8,
1989), cert den 493 US 1036 (1990) (refusing to recognize defama-
tion by implication). Pierce v Capital Cities Communications, Inc, 576
F2d 495 (CA 3, 1978), cert den 439 US 861 (1978); Woods v Evans.
ville Press Co, 791 F2d 480, 486 (CA 7, 1986) (an implied statement,
just as a statement made in direct language, can be defamatory).
A-40
lished with actual malice. The district court and the fed-
eral circuit court rejected each of these claims. Moreover,
they rejected Herbert’s claims that the overall defama-
tory effect of the reports comprised a separate basis for
recovery.
The federal circuit court distinguished “an overall
defamatory impact” from “a particular defamatory impli-
cation ” It reasoned that in certain circumstances,
“a combination of individual statements [not in them-
selves defamatory] might lead the reader to draw an
inference that is damaging to the plaintiff.” However, the
court reasoned that no cause of action would lie where
“the defamatory ‘impact’ of the publication is the same
as the defamatory implication conveyed by each of the
individual statements.” /d. at 307. Because the court had
previously found that each defamatory implication
alleged by the plaintiff had not been published with
actual malice — i.e., reckless disregard of falsity, it con-
cluded that “to permit Herbert to rest a cause of action
... on the publication's ‘overall impact’ would be a mean-
ingless gesture, since the defamatory implications of the
specific statements and the overall impact of the publica-
tions are identical.” /d. at 308.
Although the Herbert court recognized the possibility
of an “overall impact” separate and apart from the “impli-
cations of the specific statements,” it applied the same
standard of fault — in that case actual malice — to both
types of defamation.
2. Cases cited by the plaintiffs.
The plaintiffs mistakenly argue that “no constitutional
issue is raised by this appeal, and the only legal question
[presented] is whether, under the common law of
Michigan, implication, insinuation or inference may sup-
port a defamation action.” On the contrary, the legal
A-41
question presented whether, in alleging defamation by
implication, the plaintiffs carried their burden of proving
falsity, is one of constitutional import. In cases chal-
lenging reports by the media on matters of public
interest, the decision in Hepps, dictates that a private-
figure plaintiff bears the burden of proving falsity.
Many of the cases cited by the plaintiffs for the propo-
sition that a cause of action exists for defamation by
implication have little bearing on this case. Randall v
Evening News Ass'n, 79 Mich 266; 44 NW 783 (1890),
involved a cartoon that implied a legislator had improp-
erly received funds from the alcohol lobby. The logic of
Sullivan would clearly foreclose that case today absent a
showing of falsity and actual malice. Bronkowski v
Arlan’s Dep't Store, 12 Mich App 88; 162 NW2d 347 (1968),
and Smith v Fergan, 181 Mich App 594; 450 NW2d 3
(1989), involved private-figure plaintiffs alleging libel for
purely private-interest matters. As noted earlier, the
logic of Dun & Bradstreet, supra, suggests that the pri-
vate-figure/private-interest subject matter configuration
does not trigger heightened First Amendment scrutiny.
Hodgkins Kennels, Inc v Durbin, 170 Mich App 474; 429
NW2d 189 (1988), another case cited by plaintiffs, prop-
erly read, does not involve claims of defamation by
implication.
The plaintiffs’ arguments often confuse the issue of
defamatory meaning with the issue of falsity. The plain-
tiffs cite Schultz v Reader's Digest Ass'n, 468 F Supp 551,
994 (ED Mich, 1979), where the district court held that a
published article’s “impression that Mr. Schultz may have
been involved in ‘setting up’ Jimmy Hoffa to be murdered
. is clearly defamatory.” However, even assuming that
the Pine Knob series as a whole conveyed a defamatory
A-42
impression, the plaintiff still bears the burden of proving
underlying falsity.*4
lronically, the plaintiff also cites Doughtery v Capitol
Cities Communications, Inc, 631 F Supp 1566 (ED Mich,
1986) for the proposition that “the defamatory tone of a
radio broadcast which resulted from the omission of
known facts was capable of supporting plaintiff's defama-
tion action even though plaintiff could not point to a
single specific statement in the broadcast that was
defamatory and false.” In Doughtery, the district court
soundly trounced the plaintiff's arguments for defamation
by implication after reviewing all the evidence, much as
the trial court did in this case. As in this case, the court
noted that “[a]lthough plaintiff painstakingly presents his
version of the story behind each of the broadcasts ... he
does not succeed in uncovering any significant statement
about him that is false.” /d. at 1569. The court went on to
hold that “it is impossible to discern any false informa-
tion in the broadcasts. Each statement made had a fac-
tual basis, and where they were not factual statements,
... they were [nonactionable statements of opinion]. .. .”
The plaintiffs also cite an extensive list of cases from
other jurisdictions to illustrate that defamation by impli-
cation is a well-established cause of action. We note that
many of these cases are inapplicable to the instant case
because they involve either public figures, and focus on
34 The Supreme Court's opinion in Milkovich v Lorain Journal
Co, supra, illustrates this principle. The Court in Milkovich noted
that “the issue of falsity relates to the defamatory facts implied by a
statement. For instance, the statement, ‘I think Jones lied’ may be
provable as false on two levels. First, that the speaker really did not
think Jones had lied but said it anyway, and second that Jones really
had not lied. It is, of course, the second level of falsity which would
ordinarily serve as the basis for a defamation action, though falsity
at the first level may serve to establish malice where that is required
for recovery.” Id., 111 L Ed 2d 18, n7.
ee
A-43
the issue of actual malice not at issue here,® or involve
private plaintiffs on matters of private interest.*® In any
event, the questions whether a statement is capable of
rendering a defamatory implication and whether, in fact,
a plaintiff has proved falsity in an implication are sepa-
rate inquiries. A plaintiff alleging defamation by implica-
tion must still prove material falsity. To do otherwise
would allow a plaintiff to recover without a showing of
falsity, in contravention of the rule announced in Hepps
Our review of the plaintiffs’ proofs, conducted below, con-
vinces us that the plaintiffs failed to make such a
showing.
3. The alleged defamatory implications.
The plaintiffs’ primary claim is that the Pine Knob
series as a whole falsely implied that plaintiffs were
members or associates of organized crime. Although the
plaintiffs initially declined to provide any specific allega-
tions of falsity, they argue on appeal that the layout of
the Pine Knob articles, including photographs and head-
lines, as well as the repetition of certain words such as
‘Mafia,” “Sicilian,” and “money wash,” and indeed certain
specific statements, contribute to the overall implication
Untortunately for the plaintiffs, an inescapable implica-
tion of the Pine Knob series conforms to the facts devel-
35 see, e.g., Cochran v Indianapolis Newspapers, Inc, 175 Ind App
948; 372 NE2d 1211 (1978), Kelly v lowa State Ed Ass'n, 372 NW2d
288 (lowa, 1985), and Catalano v Pechous, 83 Ul 2d 146; 419 NE2d
350 (1980). Similarly, the Chief Justice’s concurrence urges applica-
tion of Strada v Connecticut Newspapers, Inc, 193 Conn 313; 477 A2d
1005 (1984). However, our reading of Strada finds that case so
replete with language about public figures as to provide virtually no
guidance in the instant private plaintiff case.
36
See, e.g., Moritz v Medical Arts Clinic, PC, 315 NW2d 458
(ND, 1982), Geyer v Steinbronn, 351 Pa Super 536; 506 A2d 901
(1986), and Lewis v Equitable Life Assurance Co, 389 NW2d 876
(Minn, 1986).
A-A4
oped at trial: the plaintiffs had numerous financial and
social connections with reputed organized crime figures
and these associations contributed in the financing of
Pine Knob and prompted intense investigative scrutiny, if
not harassment, from law enforcement authorities.**
Although capable of defamatory interpretation, the impli-
cations alleged by the plaintiffs do not arise from false
facts or material omissions, and, standing alone, are not
even proven by the plaintiffs to be false.
The plaintiffs it would seem, want to have it both ways
regarding their defamation by implication claims. On the
one hand, they assert that the articles as a whole dis-
seminate false implications. On the other, they point to
statements or headlines in isolation from the whole, such
as the use of the word “lent” in the statement that
“[s]everal investors associated with organized crime| |
either lent or helped Locricchio and Francell raise large
sums of money.” However, the plaintiffs did directly or
indirectly obtain loans and other financial assistance
from reputed organized crime figures. Construing the
articles as a whole, the plaintiffs_have failed to show false
implications by a preponderance of the evidence.
Similarly, the headlines in the series, while arguably
intlammatory, do not convey false implications apart
from the context of the reported facts. The two partners
did indeed, through “hustle” create “a big resort, millions
in debts, and a question: ‘is it Mafia?’” The partners did
indeed attempt to create a “money wash” by obscuring
the source of the Magill loan. The partners did indeed
have a “brush with bankruptcy” in the course of
37 ‘The evidence at trial indicated that investigative interest by
law enforcement agencies (and the resulting adverse effect on the
ability of the plaintiffs to obtain traditional sources of financing)
predated the publication of the Pine Knob series by a number of
years.
A-45
financing Pine Knob. While the headline that the partners
were “stalked by Mafia-hunters” was somewhat mis-
leading, since the “Mafia-hunters” were not stalking the
plaintiffs, the headline falls into the category of permis-
sible rhetorical hyperbole.
The most troubling aspect of the Pine Knob series lies
in the photograph in the second article of the automobile
under the caption, “Harvey Leach’s car was found with his
body in the trunk.” Reporter Wendland conceded that the
picture should have said, “in 1974,” and it is also troubling
that the caption did not say where the murder occurred.
Again, however, the articles must be construed as a
whole, and the article later pointed out that intensive
investigations by law enforcement agencies failed to link
the plaintiffs to the Leach (or Brush) murders.38
4. The burden of proving falsity in defamation by
implication.
It has been said that “there is a great deal of the law of
defamation which makes no sense.”*? One might say of
the case law regarding defamation by implication. As
noted earlier, the federal circuits and the various state
courts remain divided over both the viability and the
analytical contours of a cause of action for defamation by
implication.* For our part, we are not convinced that
defamation by implication is so analytically distinct from
38 The statement that “a score” of agencies had investigated
the Leach Brush murders, while technically false, is not defama-
tory, in that it implies that many agencies tried, but failed, to link
the plaintiffs to the murders, thus strengthening an inference that
the plaintiffs did not in fact commit the murders.
39 Prosser & Keeton, n31 supra, p771.
40 See, e.g., note, The art of insinuation: Defamation by implica-
fon, 58 Fordham L R 677, 682-683 (1990): “Some courts permit and
others prohibit a cause of action for defamation by implication.
Unfortunately, they articulate their positions infrequently.”
A-46
defamation by explicitly false facts as to require a depar-
ture from the guiding principles of general libel and First
Amendment libel law. In the absence of clear authority to
the contrary, and in light of the current contours of First
Amendment libel law, we conclude that an action for
defamation by implication must still conform to the three
guiding constitutional principles discussed above: speech
on public matters initiates heightened First Amendment
protection, true speech on public affairs cannot accrue
liability, and a plaintiff bears the burden of proving fal-
sity. Additionally, a litigant alleging defamation by impli-
cation, like any other libel plaintiff, must demonstrate a
statement or implication capable of defamatory meaning
and prove falsity and fault by, at minimum, a preponder-
ance of the evidence."
The properly framed issue in this private-figure/public-
interest media report case is not whether, in the abstract,
a plaintiff can ever prevail by alleging defamation by
implication, but rather whether the plaintiffs have proven
both statements (or implications) capable of defamatory
interpretation and falsity. Our review of the plaintiffs’
arguments and the alleged defamatory implications lead
us to agree with the trial court that the plaintiffs here
failed to carry their burden of proving the falsity either of
the statements or the implications at issue.
CONCLUSION
After a careful review of Michigan libel law, as informed
by the latest constitutional pronouncements on the sub-
41 Our review has disclosed no case where a plaintiff prevailed
by alleging defamation by implication without a showing of either
direct or underlying material falsity, or a material omission of truc
facts. The question what standard of liability would most appropri-
ately apply in such a case actual malice or negligence — need
not be addressed under the facts in this case, and thus remains a
question for a future case.
A-47
ject, it is our considered judgment that, to the extent this
media defendant can be liable for defamation by implica-
tion arising from underlying published statements of fact
not proven to be false and where no omission of material
facts exist, such defamation by implication would at least
have to pass the same standards of falsity, fault, and
burden of proof as would establish liability for defama-
tion by statements of fact.
Under the heightened standard of appellate review
required in public-interest libel cases, we conclude that
the plaintiffs have failed to meet this burden, and.
accordingly, we reverse the decision of the Court of
Appeals and reinstate the trial court’s directed verdict.
BOYLE, RILEY, and GRIFFIN, JJ., concurred with BRICKLEY. J.
CAVANAGH, C. J. (concurring tn the result).
| agree with the result reached by my Brother
BRICKLEY’S opinion. I reach that result, however, by a
somewhat different route. For the reasons stated below, |
believe plaintiffs’ defamation claim is insupportable as a
matter of law, and that defendants were entitled to pre-
trial summary judgment when they so moved in 1982.! |
therefore agree that defendants are now entitled to a
reversal of the Court of Appeals judgment presently
before us, and a reinstatement of the circuit court's
1 a ‘ : % .
The circuit court denied defendants’ second motion for sum-
mary judgment in 1982, and the Court of Appeals affirmed. We did
not approve that decision, but simply denied interlocutory leave to
appeal. 419 Mich 860 (1984). The United States Supreme Court
denied certiorari. 469 US 1018 (1984). With the benefit of 20 20
hindsight, this Court, in my view, should have granted leave to
appeal in 1984 and should have reversed the Court of Appeals deci-
sion at that time.
A-48
directed verdict. | adopt Justice BRICKLEY’S thorough
statement of the facts.
I
APPELLATE REVIEW OF FALSITY
At the outset, | must respectfully disagree with my
Brother BRICKLEY’S conclusion that the underlying fac-
tual issue of falsity is subject to independent appellate
review as a “constitutional fact” question. See BRICKLEY,
ante, pp 113, 118-123. While | sympathize with the free
speech concerns which animate my colleague's analysis,
| believe that analysis blurs the distinction between the
defamation plaintiffs’ acknowledged constitutional
burden of proving falsity, and the nature of the issue of
falsity itself.
As my colleague correctly notes, see BRICKLEY, ante,
p 113, the First Amendment requires a defamation plain-
tiff, at least in a case involving speech of public con-
cern, to bear the burden of proving falsity. See
Philadelphia Newspapers, Inc v Hepps, 475 US 767; 106 $
Ct 1558; 89 L Ed 2d 783 (1986). It does not follow, how-
ever, from the fact that constitutional principles require
a certain party to bear a certain burden of proof on a
certain issue at trial, that an appellate court must or
should independently review the merits of the issue.
For example, in a criminal case the government is con-
stitutionally required to bear the burden of proving the
defendant's guilt beyond a reasonable doubt. Failure to
so instruct the jury is grounds for reversal. See /n re
Winship, 397 US 358; 90 S Ct 1068; 25 L Ed 2d 368
(1970). But if the jury is properly so instructed and
finds the defendant guilty, constitutional principles have
never been thought to require appellate courts to inde-
pendently review the underlying factual issue of guilt,
and thereby substitute their judgment de novo for that
A-49
of the jury. Rather, appellate courts apply the well-
established “sufficiency of the evidence” standard, con-
struing the evidence in the light most favorable to the
verdict and asking only whether a rational jury could
properly have reached that verdict. See Jackson v Vir-
ginia, 443 US 307, 318-319; 99 S Ct 2781: 61 L Ed 2d 560
(1979); Glasser v United States, 315 US 60, 80: 62 S Ct 457:
86 L Ed 680 (1942); People v Hampton, 407 Mich 354: 285
NW2d 284 (1979). A similarly deferentia! standard of
appellate review has traditionally been applied to jury
verdicts in civil cases. See Kupkowski v Avis Ford, Inc,
395 Mich 155, 167-168; 235 NW2d 324 (1975): Dodd v Sec-
retary of State, 390 Mich 606, 612; 213 NW2d 109 (1973).
My colleague would analogize the issue of falsity to
the “constitutional fact” issue of “actual malice” in a
defamation case, over which appellate courts are consti-
tutionally required to exercise independent review. See,
e.g., Harte-Hanks Communications, Inc v Connaughton,
491 US 657; 109 S Ct 2678; 105 L Ed 2d 562 (1989): Bose
Corp v Consumers Union, 466 US 485: 104 S Ct 1949: 80 L
Ed 2d 502 (1984). Another classic example of a consti-
tutional fact question subject to independent appellate
review is the voluntariness of a confession. See, e.g., Ari-
zona v Fulminante, 499 US __; 111 S Ct 1246: 113 L Ed 2d
302 (1991). Actual malice and the voluntariness of a con-
fession, however, are mixed questions of fact and law.
Falsity, by contrast, would appear to be a classic issue
of pure historical fact. Indeed, with regard to subsidiary
factual questions underlying the ultimate issue of actual
malice, the Court in Harte-Hanks strongly suggested —
and four concurring justices made explicitly clear —
that the appellate court need not independently review
“the historical facts — e.g., who did what to whom and
when.” 491 US 694 (White, J., joined by Rehnquist, C. J.,
concurring); see also id. at 688 (opinion of the Court):
id. at 697-699 (Scalia, J., concurring in the judgment); id.
A-50
at 696 (Kennedy, J., concurring) (indicating agreement
with Justice Scalia’s analysis).
Not only does it seem clear that the United States
Supreme Court is not inclined to find an independent
review standard constitutionally required with regard to
the issue of falsity, but this Court’s own precedents have
consistently viewed the determination of truth or falsity in
defamation cases as a purely factual question which
should generally be left to the jury. See Steadman v Lapen-
sohn, 408 Mich 50, 53-54; 288 NW2d 580 (1980); Cochrane v
Wittbold, 359 Mich 402, 408; 102 NW2d 459 (1960).3
Hepps, of course, nas left unsettled the question
whether falsity may be proved merely by a preponder-
ance of the evidence, or whether some higher burden
(such as “clear and convincing evidence”) is consti-
tutionally required.4 For reasons elaborated below, how-
Even while reaffirming independent appellate review in the
actual malice context, the Court in Harte-Hanks noted that under-
lying factual questions like “credibility determinations” are not inde-
pendently reviewed. See id. at 688. Justice BRICKLEY himself
suggests that his independent review standard would not extend to
“credibility determinations.” Ante, p 112, n17. Yet the factual issue
of falsity will frequently amount to no more and no less than a
credibility contest between witnesses at trial. Thus, if Justice
BRICKLEY’S independent review standard with regard to falsity is to
have any real meaning, it would necessarily have to apply even to
credibility issues, a province traditionally reserved most jealously
for the jury as trier of fact.
3 This is not to suggest, in light of free speech concerns, that a
jury’s finding with regard to falsity should be immune from any
effective appellate scrutiny. For reasans elaborated below, I do not
think we need to address in this case whether, for example, appel-
late review of falsity should be limited to the extremely lenient
“sufficiency of the evidence” standard traditionally used to review
civil jury verdicts, or whether a more searching standard (such as
“clearly erroneous” review) should be employed.
4 See Hepps, 475 US 779, n4 (“|wle ... have no occasion to
consider the quantity of proof of falsity that a private-figure plain-
tiff must present” ).
‘—
A-51
ever, | believe this case can properly be resolved
without any further inquiry into the precise scope of
either appellate review of falsity or the constitutional
burden of proving falsity at trial. | would simply con-
clude that there is no proper need or basis in this case
to adopt the standard of independent appellate review
urged by my colleague.
II.
DEFAMATION ON THE BASIS OF
IMPLICATIONS FROM TRUE FACTS
| find it useful to begin by noting the issues which the
parties do not raise on this appeal. Most significantly,
plaintiffs have conceded the truth — or at least that
they are unable to prove the material falsity — of all
the specific factual statements contained in the four dis-
puted articles. Plaintiffs’ claim, in a nutshell, is that the
articles, taken as a whole, nevertheless conveyed to the
average reader certain vague, overall “implications”
which plaintiffs claim to be false. These alleged implica-
tions, as defined by plaintiffs themselves, boil down to
the proposition that plaintiffs “are Mafia.”> Defendants.
for their part, do ot challenge the jury verdict on the
ground that plaintiffs failed to prove the requisite
degree of fault, nor do they challenge the finding that
plaintiffs are private rather than public figures. Defen-
As Justice BRICKLEY notes, plaintiffs, toward the very begin-
ning of this litigation, responded to defendants’ interrogatories by
stating that
the defamation allegations ... are not necessarily based on
a false statement(s) in any one particular article, but rather,
that the entire series of articles, in their entirety, injured
the reputations of plaintiffs as the same represented a
false portrayal, implication, imputation and/or insinuation
that plaintiffs, among other things, are or were members
and ‘or associates of an organized criminal society, other-
wise known as the “Mafia”. .. .
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dants’ defense is essentially one of truth. Defendants
- both deny that the implications of which plaintiffs com-
plain can fairly be said to arise from the articles, and
they contend in any event that, given the conceded
truth of the specific factual statements, any overall
implications which do arguably arise therefrom are nec-
essarily privileged as “implications from true facts.”
Plaintiffs’ claim is thus vastly different from the more
typical or familiar “defamatory implication” claim. Plain-
tiffs do not allege that any particular factual statement
by defendants is reasonably susceptible of conveying a
specific factual implication which is provably false. Nor
do they contend that defendants, by selectively omitting
crucial relevant facts, have conveyed any misleading fac-
tual implication on the basis of otherwise true state-
ments. Rather, they contend that a collection of
concededly true factual statements amounts to false
defamation because of the inferential or speculative
conclusions that the average reader might draw from
the totality of those statements. Thus, while it is
undoubtedly true, as a general matter, that defamatory
implications may be potentially actionable if provably
false, the case law cited by plaintiffs reiterating that
familiar principle is ultimately inapposite and unhelpful.
| believe the issue in this case, properly framed, is
best analyzed by recourse to those cases which have
addressed the somewhat elusive prgblem of “defama-
tion by implications from true facts.” While this difficult
area of defamation law has not yet been fully explored
— and | have no pretensions that this Court can or
should presume to offer any definitive solutions today
— a number of cases have set forth useful and persua-
sive analyses of the issue. Perhaps the leading case is
Strada v Connecticut Newspapers, Inc, 193 Conn 313, 323:
477 A2d 1005 (1984), where “the plaintiff [sought] to
A-53
recover from a publication where all the underlying and
stated facts [were] proved to be true. or substantially
true, claiming that the ‘slant’ of the article [gave] rise to
allegedly false and defamatory implications.” In a
thoughtful and carefully analyzed opinion, the Con-
necticut Supreme Court concluded that “[t]he goal of
nurturing a free and active press in the political arena
mandates deiial of recovery by a public figure where
the allegation of defamation ‘depends fundamentally on
an interpretation of various aspects of the broadcast.
not on anything directly said in it.” Jd
When any inference or innuendo does not
arise from the omission of material facts. but
rather from the editorial choice of layout, the
plaintiff may not recover for libel by innuendo.
The media would be unduly burdened if. in addi-
tion to reporting facts about public officers and
public affairs correctly, it had to be Vigilant for
any possibly defamatory implication arising from
the report of those true facts. [(/d. at 326.]
It is true that Strada involved the alleged defamation of
a public figure, and the court suggested at some points
that its rule should be limited to that category of cases.
| believe, however, that the gist of Strada’s reasoning, if
not necessarily its precise contours. properly applies to
this case, which, although involving private-figure plain-
tiffs, involves speech of public concern.®
| find highly instructive the reasoning of Woods v
Evansville Press Co, 791 F2d 480 (CA 7, 1986). The court
in Woods, while conceding that implied defamatory
statements may be actionable, and even assuming for
ga ; ‘ : : ; : :
The issue of possible organized-crime involvement in a
major business and entertainment development is certainly of
public concern.
A-54
purposes of analysis that the article there at issue
could reasonably be read to contain the “defamatory
implications” ascribed to it by the plaintiff in that case,
see id. at 486, held that
requiring a publisher to guarantee the truth of
all the inferences a reader might reasonably
draw from a publication would undermine the
uninhibited, open discussion of matters of public
concern. A publisher reporting on matters of
general or public interest cannot be charged
with the intolerable burden of guessing what
inferences a jury might draw from an article and
ruling out all possible false and defamatory innu-
endoes that could be drawn from the article. [/d.
at 487-488. ]
‘he court in Strada cited a case also discussed by my
Becther BRICKLEY, Memphis Publishing Co v Nichols, 569
© ¥ a 412 (Tenn, 1978), which addressed a claim of defa-
; ion by implication from true facts. See BRICKLEY,
ite, p 124-126. | agree with my colleague that Nichols
joes not support plaintiffs’ claim in this case. Indeed, |
think the differences between the claims in Nichols and
this case are very illustrative. The plaintiff in Nichols
was a gunshot victim who alleged that she was falsely
defamed by an article describing the shooting, which
occurred at the victim’s home. The female assailant’s
husband was present in the victim's home at the time of
the shooting, and he was also fired upon. The defendant
newspaper published those facts, which were true as far
as they went, but failed to report that the victim’s own
husband, as well as two other neighbors, were also pre-
sent at the time, and that the group was simply con-
versing in the living room. By omitting those crucial
relevant facts, the article, while technically true, directly
and misleadingly implied that the victim and the
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assailant’s husband were caught in an illicit, adulterous
rela
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