Diversified Management, Inc. v. Denver Post, Inc.

653 P.2d 1103, 33 A.L.R. 4th 193, 8 Media L. Rep. (BNA) 2505, 1982 Colo. LEXIS 731

• Court: Supreme Court of Colorado
• Decided: November 15, 1982
• Docket: 81SA491
• Status: Published

Opinions

ROVIRA, Justice.

This is an appeal from a jury verdict in favor of defendants-appellees, The Denver Post and John Toohey, a Denver Post reporter, in a libel action brought by plain-, tiffs-appellants, Eugene DeWitt and Diversified Management, Inc. (DMI). Appellants’ contention is that the district court committed reversible error in a number of its instructions to the jury. We disagree.

This litigation arose' out of two articles written by Toohey and published by the Post on April 28 and May 12, 1974. The articles dealt with certain financial dealings of the appellants and described the relationship between DeWitt, his company (DMI), and a banker named Saul Davidson. The articles also discussed investigations of DeWitt by the Colorado Real Estate Commission, the U.S. Department of Housing and Urban Development, an Arizona grand jury, the U.S. Postal Service, and “a variety of other federal and state regulatory and law-enforcement agencies.”

In 1975 a complaint was filed by appellants which included claims for libel, invasion of privacy, outrageous conduct, and conspiracy to violate civil rights under 42 U.S.C. sections 1983 and 1985. The appel-lees denied liability and pleaded as defenses that the appellants were public figures and that the publications involved matters of public or general concern. Subsequently, the trial court granted a partial summary judgment in favor of appellees, ruling, as a matter of law, that certain of the challenged statements were not defamatory.

Trial began in October 1979, and at the close of evidence all claims except those of libel were dismissed. After over three weeks of trial, the libel claims were submitted to the jury, which returned a verdict in favor of appellees.

Appellants appealed to the court of appeals. Because constitutional issues were raised, we accepted a transfer of jurisdiction pursuant to section 13 — 4—110(l)(a), C.R. S.1973. See section 13-4-102(l)(b), C.R.S. 1973.

I.

In New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), the United States Supreme Court began what has been a long process of “constitutionaliz-ing” the law of libel. The Court there held that the first and fourteenth amendments to the United States Constitution prohibit a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves with “convincing clarity” that the statement was made with “actual malice” — that is, with knowledge that the statement was false or with reckless disregard of whether it was false or not. The Court found the rule necessary to prevent “self-censorship” on the part of the press, which in the absence of the rule would make only statements that “steer far wider of the unlawful zone.” 376 U.S. at 279, 84 S.Ct. at 725-726 (quoting Speiser v. Randall, 357 U.S. 513, 526, 78 S.Ct. 1332, 1342, 2 L.Ed.2d 1460 (1958)). The Court believed the rule to be an appropriate balance between the competing interests of protection of reputation and the ability to engage in “uninhibited, robust, and wide-open” debate on public issues.

The rule of New York Times was extended to include “public figures” in Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). The opinion covered two separate libel actions. The first, Curtis Publishing Co. v. Butts, involved an article in the Saturday Evening Post which stated that a college football coach had conspired to “fix” a football game. The second, Associated Press v. Walker, involved a news story that a former army general had led a charge against federal marshals attempting to enforce a desegregation decree at the University of Mississippi. The Court stated:

“Butts may have attained that status by position alone and Walker by his purposeful activity amounting to a thrusting of his personality into the “vortex” of an important public controversy, but both commanded sufficient public interest and had sufficient access to the means of counterargument to be able ‘to expose through discussion the falsehood and fallacies’ of the defamatory statements.”

388 U.S. at 155, 87 S.Ct. at 1991 (quoting Whitney v. California, 274 U.S. 357, 377, 47 S.Ct. 641, 649, 71 L.Ed. 1095 (1927)) (Brandeis, J., dissenting).

The Court in Butts stated that “[t]he guarantees of freedom of speech and press were not designed to prevent ‘the censorship of the press merely, but any action of the government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential ....’” 388 U.S. at 150, 87 S.Ct. at 1989 (quoting 2 Cooley, Constitutional Limitations 886 (8th ed.)). Although the issues in Butts differed from those in New York Times, supra, in that the actions could not be analogized to prosecutions for seditious libel, the Court held that the public interest in the circulation of the materials involved was equally important.

The Supreme Court has described two ways that one might become a public figure:

“For the most part those who attain this status have assumed roles of especial prominence in the affairs of society. Some occupy positions of such persuasive power and influence that they are deemed public figures for all purposes. More commonly, those classed as public figures have thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved. In either event, they invite attention and comment.”

Gertz v. Robert Welch, Inc., 418 U.S. 323, 345, 94 S.Ct. 2997, 3009, 41 L.Ed.2d 789 (1974).

In Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971), a plurality of the Supreme Court adopted a standard which extended the New York Times rule to “all discussion and communication involving matters of public or general concern.” The opinion stated that “[fjreedom of discussion, if it would fulfill its historic function in this nation, must embrace all issues about which information is needed or appropriate to enable the members of society to cope with the exigencies of their period.” 403 U.S. at 41, 91 S.Ct. at 1818 (quoting Thornhill v. Alabama, 310 U.S. 88, 102, 60 S.Ct. 736, 744, 84 L.Ed. 1093 (1940)). The plurality rejected the idea that the purpose of a free press was only to protect criticism of government, stating that the Founders believed that a free press would advance “truth, science, and morality” as well.

The Rosenbloom plurality criticized a rule that would protect only defamation of public officials and public figures, pointing out that the public interest in the incident at the University of Mississippi at issue in Associated Press v. Walker, supra, would have been the same if the speaker had been an anonymous student and not a well-known retired army general. Moreover, General Walker’s fame stemmed from events completely unconnected with the episode in Mississippi. The plurality went on to state:

“If a matter is a subject of public or general interest, it cannot suddenly become less so merely because a private individual is involved, or because in some sense the individual did not ‘voluntarily’ choose to become involved. The public’s primary interest is in the event,- the public focus is on the conduct of the participant and the content, effect, and significance of the conduct, not the participant’s prior anonymity or notoriety.”

403 U.S. at 43, 91 S.Ct. at 1819.

A majority of the Supreme Court declined to adopt the Rosenbloom plurality standard in Gertz v. Robert Welch, Inc., supra, holding that “so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual.” 418 U.S. at 347, 94 S.Ct. at 3010.

Following Gertz, we adopted the plurality standard from Rosenbloom, with the limitation that “reckless disregard” for whether a statement is true does not mean that the person must have had serious doubts as to its truth. That is, we adopted Rosenbloom, but without the definition of reckless disregard added by St. Amant v. Thompson, 390 U.S. 727, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968), to the definition of “actual malice.” Walker v. Colorado Springs Sun, Inc., 188 Colo. 86, 538 P.2d 450 (1975). We stated:

“We hold that, when a defamatory statement has been published concerning one who is not a public official or a public figure, but the matter involved is of public or general concern, the publisher of the statement will be liable to the person defamed if, and only if, he knew the statement to be false or made the statement with reckless disregard for whether it was true or not.”

188 Colo, at 98-99, 538 P.2d at 457. We reached that result because we believed that a simple negligence rule would have a chilling effect on the press that would be more harmful to the public interest than the possibility that a defamed private individual would go uncompensated. In order to honor the commitment to robust debate embodied in the first amendment and to ensure sufficient scope for first amendment values, we chose to extend constitutional protection to any discussion involving matters of public concern, irrespective of the notoriety or anonymity of those involved.

The considerations which led to our adoption of Rosenbloom now cause us to conclude that first amendment values would be better honored by adopting the same definition of “reckless disregard” in cases involving public officials, public figures, and matters of public or general concern. To the extent that Walker held otherwise, we now overrule it.

II.

Resolution of two of appellants’ contentions on appeal requires a determination of the status of appellants and of the nature of the matter involved — that is, whether appellants are public officials, public figures, or private figures, and whether the issues involved are matters of public or general concern. We are of the view that neither DeWitt nor DMI is a public official or public figure, but the issues involved are matters of public or general concern.

There is, of course, no question that appellants are not public officials. It is equally clear that they do not fall within the first category of public figure under Gertz, supra. That is, they do not “occupy positions of such persuasive power and influence that they are deemed public figures for all purposes.” The closer question is whether appellants fall into the second category, that is, whether they have placed themselves in the forefront of a public controversy in order to influence the resolution of the issues involved.

In determining whether a person is a public figure, a court must examine the “nature and extent of an individual’s participation in the particular controversy giving rise to the defamation.” Wolston v. Reader’s Digest Association, Inc., 443 U.S. 157, 167, 99 S.Ct. 2701, 2707, 61 L.Ed.2d 450 (1979). In DiLeo v. Koltnow, Colo., 613 P.2d 318 (1980), we were faced with the question of whether a discharged police officer was a public figure in the limited area of a controversy concerning his termination from the police department and his various suits seeking reinstatement and redress for alleged violations of his civil rights. DiLeo had initiated contact with several newspapers and reporters because he believed the cases to be newsworthy and he wanted to get information to the public. We held DiLeo to be a public figure because “[r]ather than quietly seeking to exert his legal rights, he invited public attention and comment.” 613 P.2d at 322.

Appellees assert that this same reasoning applies to appellants’ conduct in these matters and consequently appellants are public figures. Appellees describe DeWitt’s “ostentatious and grand style, which was bound to invite media attention and comment.” They also describe a 1969 news conference called by DeWitt, in which he accused the Better Business Bureau of racial bias after he began having difficulties with the bureau in connection with a carpet business. Appellees also point to a 1974 meeting DeWitt had with reporters of the Rocky Mountain Journal to give his side of an unfavorable story they had written about him. DMI is also a public figure, they argue, because it “generally reflected DeWitt’s personality and style,” and it made heavy use of various media channels to promote its real estate developments.

The mere fact that the press was attracted to appellants’ activities does not make them public figures. As the United States Supreme Court stated in Hutchinson v. Proxmire, 443 U.S. 111, 135, 99 S.Ct. 2675, 2688, 61 L.Ed.2d 411 (1979), “those charged with defamation cannot, by their own conduct, create their own defense by making the claimant a public figure.” See also Rollenhagen v. City of Orange, 116 Cal.App.3d 414, 172 Cal.Rptr. 49 (1982) (“a publisher should not be able to define the scope of the privilege by its own determination of what it chooses to publish.”).

We do not believe that DiLeo mandates a finding that appellants are public figures. DiLeo actively sought press coverage of the controversy surrounding his termination from the police force. Although DeWitt twice initiated contacts with reporters, he probably would have preferred no press coverage at all.

We are reluctant to make too easy a finding that one is a public figure. Up to this point, we have been focusing on the free expression rights of the press and have been concerned with the chilling effect that libel actions have on the press. There are, however, competing first amendment concerns. Just as too easy a finding of liability on the part of a newspaper has a chilling effect on its expression, too easy a finding that someone has become a public figure by virtue of responding to unfavorable publicity can have a chilling effect on the expression of a private figure. A private figure subjected to unfavorable publicity should not forfeit protection from defamation as a price of his response.

Appellees also argue that DMI is a public figure because of its business activities. They cite a number of cases holding that corporations, because of their statutory nature and the very fact of their doing business, are public figures. For example, in Reliance Insurance Co. v. Barrons, 442 F.Supp. 1341 (S.D.N.Y.1977), a United States District Court held that an insurance company was a public figure in the general sense (i.e., the first Gertz category) because of its billions of dollars in assets, the fact that the insurance business is subject to heavy state regulation, and the fact that the company was offering to sell its stock, thereby thrusting itself into the public arena. Similarly, in American Benefit Life Insurance. Co. v. McIntyre, 375 So.2d 239 (Ala.1979), the Alabama Supreme Court held that an insurance company was a public figure because it was subject to close regulation by the government and it owed its very existence as an entity to the state. The court held that the influence of such a company on society could not be ignored.

The above-described cases do not seem consistent with Hutchinson, supra, where a research scientist who had received numerous federal grants brought a libel action against a United States Senator for statements surrounding the senator’s awarding Hutchinson the “Golden Fleece Award.” The lower courts had held that Hutchinson was a public figure for the limited purpose of comment on his receipt of federal funds, for research projects. The Supreme Court, in declining to find Hutchinson to be a public figure, stated:

“Hutchinson did not thrust himself or his views into public controversy to influence others. Respondents have not identified such a particular controversy; at most, they point to concern about general public expenditures. But that concern is shared by most and relates to most public expenditures; it is not sufficient to make Hutchinson a public figure. If it were, everyone who received or benefited from the myriad public grants for research could be classified as a public figure — a conclusion that our previous opinions have rejected.”

443 U.S. at 135, 99 S.Ct. at 2688. Similarly, one does not become a public figure merely by availing himself of the marketplace. DMI has not thus become a public figure.

The rationale for the cases almost automatically designating corporations as public figures is that business activities are affected with a public interest. Because we adopted Rosenbloom in Walker v. Colorado Springs Sun, Inc., we need not make a blanket rule that, because businesses tend to be involved in matters of public interest, all businesses are public figures. Instead, we look to the circumstances of the case to determine whether it is a matter of “public or general concern,” regardless of whether the parties involved are corporations.

Having concluded that appellants are not public figures, we now consider whether the publications involved matters of public or general concern. We need not precisely define the outer boundaries of the term “public or general concern” at this point, for the activities involved here are clearly within them. The matters involved here are alleged widespread and ongoing land-development schemes of questionable propriety. Not all of the lots were yet sold; consequently, the “public” contained a number of potential buyers who had an abiding interest in the matter. As a result, we believe the trial court was correct in treating this case as one involving a private figure in a matter of public or general concern.

III.

Appellants’ first argument is that the trial court erred in instructing the jury that it should apply the “clear and convincing” standard of proof to the finding of reckless disregard. Their argument is based upon section 13-25-127(1), C.R.S. 1973, which provides that “[a]ny provision of the law to the contrary notwithstanding and except as provided in subsections (2) and (3) of this section, the burden of proof in any civil action shall be by a preponderance of the evidence.” Unless the clear- and-convincing standard is constitutionally required, the statute would require that the preponderance standard be applied.

In New York Times, supra, the United States Supreme Court stated that malice must be proved with “convincing clarity.” 376 U.S. at 285-86, 84 S.Ct. at 728-729. The plurality in Rosenbloom, supra, explained the need for the higher standard as follows:

“In the normal civil suit where [the preponderance] standard is employed, ‘we view it as no more serious in general for there to be an erroneous verdict in the defendant’s favor than for there to be an erroneous verdict in the plaintiff’s favor.’ In re Winship, 397 U.S. 358, 371 [90 S.Ct. 1068, 1076, 25 L.Ed.2d 368] (1970) (Harlan, J., concurring). In libel cases, however, we view an erroneous verdict for the plaintiff as most serious. Not only does it mulct the defendant for an innocent misstatement ... but the possibility of such error, even beyond the vagueness of the negligence standard itself, would create a strong impetus toward self-censorship, which the First Amendment cannot tolerate.”

403 U.S. at 50, 91 S.Ct. at 1823.

When we adopted the Rosenbloom standard in Walker, we held that “liability must be supported with convincing clarity,”¹188 Colo, at 101, 538 P.2d at 459, and in DiLeo v. Koltnow, supra, we equated “convincing clarity” with “clear and convincing.” That our decision in Walker was based upon constitutional concerns is apparent from the fact that we rejected a simple negligence rule, permitted under Gertz, because we felt it would cast a “chilling effect upon the news media....” 188 Colo, at 99, 538 P.2d at 458. Because our decision was based upon our interpretation of article II, section 10, of the Colorado Constitution,² the clear and convincing standard established in Walker supersedes the statute.

IV.

Appellant next argues that the definition of recklessness given to the jury was incorrect. Instruction Number 7 stated as follows:

“Recklessness implies a higher degree of culpability than negligence. A failure to exercise ordinary or reasonable care in ascertaining the truth of published material does not, standing alone, constitute recklessness. Such failure, however, may be considered as an element of recklessness. The gist of the meaning of recklessness is that these Defendants had a high degree of awareness that the statements published were probably false. (emphasis added).

Appellant argues that this is not a correct statement of the law in Colorado, as applied to defamation of private figures in events of public or general concern.

As discussed in part I of this opinion, when we adopted the Rosenbloom plurality standard, we did so with the express limitation that “ ‘reckless disregard’ for whether or not a statement is true does not mean that there must be a finding that the person making the statement had serious doubts as to the truth thereof.” 188 Colo, at 98, 538 P.2d at 457. Consequently, with respect to private persons involved in matters of public or general concern, a plaintiff was not required to show that the defendant entertained subjective doubts about the truth of the publication, but rather, he needed to show only that the statement was made with a high degree of indifference to its truth or falsity.

In availing ourselves of the flexibility given us by Gertz, we moved cautiously in Walker toward a greater degree of protection for the press. We adopted the Rosen-bloom standard for matters of public or general concern, but did not take the final step of using the same St. Amant definition of “reckless disregard” that United States Supreme Court decisions required us to use in cases involving public officials and public figures.³ We recognized that the St. Am-ant definition had the virtue of providing a more concrete guideline to a jury, but stated that “the consensus of the majority of our court is that we should not approve the St. Amant definition at this time, since the term ‘reckless disregard’ has had rather frequent usage in the tort field in this state.” 188 Colo, at 99, 538 P.2d at 457 (emphasis added). We now believe the time has come to take this final step.

“Freedom of speech and press. No law shall be passed impairing the freedom of speech; every person shall be free to speak, write or publish whatever he will on any subject, being responsible for all abuse of that liberty; and in all suits and prosecutions for libel the truth thereof may be given in evidence, and the jury, under the direction of the court, shall determine the law and the fact.”

Our reason for adopting Rosenbloom was that the public is primarily interested in the event, rather than the actors, and that the press should not be hindered in its reporting of matters of legitimate public interest by the fear of libel actions. We now believe that the robust debate on public issues that we were seeking to protect in Walker is better protected by using the St. Amant definition of “reckless disregard” in cases involving matters of public or general concern, as well as in cases involving public officials and public figures. To the extent that Walker held otherwise, we hereby overrule it. As a result, the instruction given by the trial court was correct.

V.

Appellants’ final contention is that the trial court’s refusal to give the jury Plaintiff’s tendered Instruction Number 2 was prejudicial error. That instruction contains portions of the United States and Colorado Constitutions and reads as follows:

“The Constitution of the United States in the 1st Amendment provides as follows:

“Freedom of religion, speech and press ... right of petition. Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble and to petition the government for a redress of ' grievances.

“The Constitution of the State of Colorado, Article II, Section 10 provides as follows:

“Freedom of speech and press. No law shall be passed impairing the freedom of speech; every person shall be free to speak, write or publish whatever he will on any subject, being responsible for all abuse of that liberty; and in all suits and prosecutions for libel the truth thereof may be given in evidence, and the jury, under the direction of the Court, shall determine the law and the fact.”

The above excerpts are clearly accurate statements of the law, but even accurate statements of the law should not be used in jury instructions if they are misleading. See Daly v. Lininger, 87 Colo. 401, 288 P. 633 (1930). We have also held that it is error to include statements of the law without instructing the jury on how to apply them. Crosby v. Kroeger, 138 Colo. 55, 330 P.2d 958 (1958). The law and its application were already given to the jury in its instructions on libel, and the form of the instructions is a matter within the discretion of the trial court. Montgomery Ward & Co. v. Kerns, 172 Colo. 59, 470 P.2d 34 (1970).

As a demonstration of the lack of usefulness of an instruction containing a verbatim quotation of the first amendment, one need only consider the variety of conflicting views concerning its meaning. For example, Justice White, dissenting in Gertz, supra, was of the opinion that a state should be permitted to impose strict liability for defamatory falsehoods about private figures. On the other hand, Justice Black’s well-known view was that the first amendment was intended to leave the press entirely immune from libel judgments. See, e.g., Rosenbloom v. Metromedia, supra, (Black, J., concurring). Given the diversity of views concerning the meaning of the first amendment, it is readily apparent that the tendered instruction could only have misled the jury.

The judgment is affirmed.

ERICKSON, J., dissents.

1 . The challenged conduct in Walker occurred prior to the effective date of section 13-25-127.

2 . Article II, section 10, reads as follows:

3 . See Kuhn v. Tribune-Republican Publishing Co., 637 P.2d 315 (Colo.1981); DiLeo v. Koltnow, Colo., 613 P.2d 318 (1980).