Durando v. Nutley Sun

37 A.3d 449, 209 N.J. 235, 40 Media L. Rep. (BNA) 1461, 2012 WL 612305, 2012 N.J. LEXIS 196
CourtSupreme Court of New Jersey
DecidedFebruary 28, 2012
StatusPublished
Cited by35 cases

This text of 37 A.3d 449 (Durando v. Nutley Sun) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Durando v. Nutley Sun, 37 A.3d 449, 209 N.J. 235, 40 Media L. Rep. (BNA) 1461, 2012 WL 612305, 2012 N.J. LEXIS 196 (N.J. 2012).

Opinions

Justice ALBIN

delivered the opinion of the Court.

New Jersey’s common law provides special protection to speech touching on matters of public concern, even when that speech contains some careless falsehoods. A free and robust press, one that does not engage in self-censorship from fear of ruinous lawsuits, is essential to an enlightened democracy. Our jurisprudence recognizes that the free and unimpaired flow of information on matters of public concern necessarily leads to some erroneous reporting due to human error. In those circumstances, freedom of speech and the press are values that outweigh the right to security in one’s personal reputation. Provided that a reporter or editor does not publish a false and defamatory statement with actual malice—that is, knowing that the statement is false or recklessly disregarding the truth—the erroneous statement contained in an article touching on a matter of public interest is not actionable.

In this case, a regional weekly newspaper inaccurately printed a front-page “teaser,” reporting that “two local men,” plaintiffs— whose names were not mentioned in the teaser—had been arrested for stock fraud. The two men were charged with illicit stock manipulation in a complaint filed by the Securities and Exchange Commission, but they had not been arrested. Readers who turned to the article on page eleven learned that plaintiffs were the subject of a civil complaint alleging that they had bilked unsuspecting investors of nine million dollars. No word or phrase in the article itself suggested that plaintiffs had been arrested.

[240]*240Plaintiffs filed a civil action against defendants, the newspaper and its parent company, alleging, among other things, defamation and false light. The trial court granted summary judgment to defendants, finding that plaintiffs could not establish that the teaser was published with actual malice. The Appellate Division upheld that decision.

We affirm. Although this case unquestionably involves sloppy journalism, the careless acts of a harried editor, the summary-judgment record before us cannot support a finding by clear and convincing evidence that the editor knowingly or in reckless disregard of the truth published the false teaser.

I.

On November 15, 2005, the Securities and Exchange Commission (SEC) filed a complaint in the United States District Court for the District of Connecticut against Ronald Durando and Gustave Dotoli (residents of Nutley), charging them with various violations of federal securities laws.1 The complaint alleged that Durando and Dotoli acquired “control of a failed and indebted company,” changed the company’s name, inflated “the trading price of the company’s stock through false publicity,” and then sold the stock “to the public at artificially-inflated prices for large profits.” As a result of this “fraudulent ‘pump and dump’ market manipulation scheme,” the complaint alleged that Durando and Dotoli (and other defendants) “gained more than $9 million in proceeds from illegal sales of essentially worthless” stock. The SEC specifically charged Durando and Dotoli with “illegal insider trading,” filing “reports containing false and misleading statements,” and other violations of federal securities laws. The SEC sought to have Durando and Dotoli disgorge all proceeds “received [241]*241from the illegal conduct” and to enjoin them permanently from becoming officers or directors in any publicly traded company.2

On November 17, 2005, The Record—a newspaper owned by North Jersey Media Group—published an article written by staff writer Kathleen Lynn about the SEC complaint. The headline of the article read: “8 N.J. men accused in $9M stock scam.” The article in its entirety is set forth below:

Three New Jersey men pumped up the price of a worthless stock, then dumped it on unsuspecting investors in a $9 million scheme, the Securities and Exchange Commission said Wednesday.
According to the SEC, which filed a civil complaint Tuesday in Connecticut, the scheme involved a telecommunications company called PacketPort.com of Norwalk, Conn.
According to the SEC, Ronald Durando, 48, of Nutley, bought a controlling stake in an insolvent company called Linkon. Working with Gustave Dotoli, 70, of Nutley, and attorney Robert H. Jaffe, 69, of Mountainside, Durando changed the company’s name to PacketPort.com, the SEC said. Durando became CEO and Dotoli the chief financial officer.
Durando then allegedly paid IP Equity Inc., a California company that ran an Internet stock newsletter, to tout PacketPorl.com to investors as a promising company in the business of Internet phone service.
As a result of this publicity, the stock price rose to about $19.50, the SEC said. Then, the SEC said, Durando, Dotoli, Jaffe, and IP Equity and its principals dumped the shares—which the SEC called “essentially worthless”—for a total of more than $9 million.
They sold most of the shares through New York stockbroker William Coons III, the SEC said.
The SEC also says that Durando, Dotoli and Jaffe falsified PacketPort.com’s financial reports.
The SEC complaint names Durando, Dotoli, Jaffe, Coons, and the two IP Equity principals, M. Christopher Agarwal and Theodore Kunzog, as defendants. The complaint, which seeks disgorgement of the profits, alleges fraud and violations of various securities laws.
Lawyers for Durando, Dotoli and Jaffe did not return calls seeking comment.
The civil ease was filed in U.S. District Court in New Haven.

No one disputes that the article accurately described the contents of the SEC complaint. Neither the SEC complaint nor the article suggested that Durando and Dotoli were arrested.

[242]*242The North Jersey Media Group also owns The Nutley Sun, a local weekly newspaper with approximately 5000 subscribers in Nutley Township and neighboring communities. The executive editor of The Nutley Sun, Paul Milo, received permission to reprint Lynn’s article in The Record about Durando and Dotoli. On December 5, 2008, Milo prepared the article for publication in The Nutley Sun’s December 8 edition—a promotional issue circulated to 2500 non-subscribers in addition to the weekly’s regular subscribers. Milo removed the last three paragraphs of the original article so that it would fit within his weekly newspaper’s space constraints. He also wrote a new headline for the article: “Local men charged in stock scheme.”

The following day, December 6, 2005, Milo composed three “teasers” for the front page of the December 8 edition of The Nutley Sun, referencing different articles within the newspaper.3 The teaser for the reprinted article read: “Local men arrested in ‘pump and dump’ scheme, page 11.” That teaser—the third listed on the upper portion of the front page—was not only smaller in font than the lead teaser, which was in bold print, but also was in much smaller font than the bold-print lead headline, entitled “Peace on earth.” The “pump and dump” teaser did not mention the names of either Durando or Dotoli. Nevertheless, the statement in the teaser that local men were “arrested” was erroneous.

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Bluebook (online)
37 A.3d 449, 209 N.J. 235, 40 Media L. Rep. (BNA) 1461, 2012 WL 612305, 2012 N.J. LEXIS 196, Counsel Stack Legal Research, https://law.counselstack.com/opinion/durando-v-nutley-sun-nj-2012.