A divided, three-judge U.S. Court of Appeals panel yesterday reinstated a lower court jury's decision that The Washington Post libeled former Mobil Oil Corp. president William P. Tavoulareas in a 1979 article about his business dealings and awarded him $2,050,000 in damages.
The appellate panel, in a 2-to-1 decision, ruled that it was "inappropriate" and "improper" two years ago for U.S. District Judge Oliver Gasch to have overturned the jury's decision, which it had reached after a 21-day trial in mid-1982.
Senior Circuit Judge George E. MacKinnon, in an opinion concurred in by Judge Antonin Scalia, said the evidence in the case " . . . taken as a whole, supports the finding that Tavoulareas demonstrated, clearly and convincingly, that the falsehoods contained in the article were published not merely through negligence or inadvertence, but with reckless disregard of whether they were false or not.
"In our opinion," the two judges said, "this is a case where the record demonstrates that a properly instructed jury found liability, that clear and convincing evidence supports its verdict."
In a sharply worded dissent, Judge J. Skelly Wright said the majority opinion "achieves no less than an ambitious, wide-ranging revision of libel jurisprudence. If this excessive jury verdict on these mundane, flimsy facts is upheld, the effect on freedom of expression will be incalculable. The message to the media will be unmistakable -- steer clear of unpleasant news stories and comments about interests like Mobil or pay the price."
MacKinnon and Scalia ordered Gasch to now consider previous Post requests to order a new trial or reduce the damages awarded by the jury. But Boisfeuillet Jones Jr., The Post's general counsel, said the newspaper instead would ask all 10 active appellate judges here, as well as the semiretired MacKinnon, to rehear the case.
Reaction to yesterday's ruling was somewhat subdued, reflecting Tavoulareas' and The Post's changing fates in the long-running case, in which the former oil company chieftain has now won twice and the newspaper once.
The 65-year-old Tavoulareas, who retired as president of Mobil's holding company last November, said in a prepared statement that he "felt from the beginning that The Post either knew the Nov. 30, 1979 story was false or published it with reckless disregard for whether it was true or false, which incidentally is the definition of actual malice," the standard by which libel cases are decided.
"I hope this decision will make for a more responsible press," said Tavoulareas, who started at Mobil as an accountant in 1947 and still serves on Mobil's board and executive committee.
Tavoulareas' chief lawyer, John J. Walsh of New York, quietly said, "We're kind of on top of the world. I feel very good of the basis on which the decision was made. The court ruled we met the toughest test, that there was clear and convincing evidence of actual malice."
Post Executive Editor Benjamin C. Bradlee, who two years ago had called Gasch's decision "a great day for newspapers everywhere," declined to comment on the appeals court reversal. Post counsel Jones said the newspaper was "very disappointed and surprised by the decision. We agree with the dissent in the case."
Jack C. Landau, executive director of the Reporters Committee for Freedom of the Press, was less restrained in criticizing the appeals court ruling. "Even if there were errors in the story, and I don't concede that there were, to let a jury say that was malicious is absurd," he said. "I don't see any way a reporter can be seen as intentionally malicious."
Henry R. Kaufman, general counsel for the Libel Defense Resources Center, said there is "more of a chance than average" that the full appellate court would rehear the case because the court appears to be sharply divided on libel questions.
The appellate court last December, in a 6-to-5 split, ruled that a Marxist professor seeking a job at the University of Maryland could not sue syndicated writers Rowland Evans and Robert Novak for disparaging comments they made about him in a column because they were opinions protected by the First Amendment.
Yesterday's ruling is the latest development in a series of well-publicized recent court cases involving major American news organizations. In recent weeks, Gen. William C. Westmoreland dropped his protracted libel suit against CBS television just as the case was about to go to the jury; and a New York jury ruled that Time magazine had printed inaccuracies concerning Israeli Gen. Ariel Sharon, but did not libel him.
The disputed Post story, written by reporter Patrick Tyler, said that Tavoulareas "set up his son," Peter, now in his mid-30s, in 1974 as a partner in a London shipping management firm, Atlas Maritime Co., which in turn operated some of Mobil's ships. The Tavoulareases, contending that the story defamed them, held them up to ridicule and embarrassed them, sued the newspaper for $50 million.
The jury ruled that the newspaper had libeled the elder Tavoulareas, but not his son, Peter. In a companion case, the jury also found that Tavoulareas' former son-in-law, Dr. Philip Piro, an eye surgeon and an initial source for the Tyler story, had slandered the Tavoulareases, awarding the former Mobil president $5,000 and his son $1,000.
Gasch had also overturned the elder Tavoulareas' victory over Piro, but let stand the $1,000 award to Peter Tavoulareas. Yesterday's appellate court decision, by the same 2-to-1 margin, also reinstated the decision against Piro.
But MacKinnon, Scalia and Wright unanimously upheld Gasch's decision overturning the jury's libel decision against special correspondent Sandy Golden, who led Tyler to an interview with Piro.
The appellate panel's majority said Tyler's story "was not 'hot news,' and the newspaper was under no significant time constraints in publishing it, yet it contained misstatements of fact and law and defamatory implications."
MacKinnon and Scalia said the jury heard sufficient evidence to rule that The Post was "motivated by a plan to 'get' the Tavoulareases , and deliberately slanted, rejected and ignored evidence contrary to the false premise of the story, generally resolving ambiguities in the light most damaging to Tavoulareas.
"The Post . . . relied on sources of questionable credibility for major portions of the defamatory allegations . . . , " according to the ruling.
"During the editing phase of the article," the two judges said, "substantial doubts regarding the accuracy of the article's central theme were voiced by at least one editor copy editor Cass Peterson who worked on the article. There is no claim or any evidence that any effort was made to address those doubts, and no substantial changes were made in response to them."
Peterson, now a Post reporter, wrote a memorandum to a Post assignment editor after reading a draft version of the story, saying that the article "just seems like a withered peanut in an 84-inch gilded shell. It's impossible to believe that Tavoulareas alone could put together such a scheme for the sake of his son's business career or that he would want to."
Peterson testified at the trial that she did not actually mean that the story was "impossible to believe," only that the focus of the story should have been different.
The appeals court said, "The issue is not whether the memorandum alone proves clearly and convincingly that the article was published with actual malice; it is whether it is evidence that, taken in conjunction with other evidence, tends to prove that fact clearly and convincingly. It does.
"Peterson's appraisal of the story gains force from the reasonableness of its interpretation and conclusion," the ruling said.
Wright, in his dissent, criticized the court's majority for arriving at its decision by considering such "impermissible" factors as The Post's "emphasis on attention-getting stories," "the career ambitions of young journalists" in pursuing the Tavoulareas story and "rejection of editorial judgments about the information to be included in an article that clearly reports both sides of a disputed story.
"Indeed, the majority appears to criticize what it takes to be the general climate in journalism today," Wright said.