The full U.S. Court of Appeals here agreed yesterday to consider former Mobil Corp. president William P. Tavoulareas' libel case against The Washington Post, vacating a three-judge panel's decision that favored the oil executive.
The 7-to-2 decision to rehear the case and void Tavoulareas' court victory two months ago effectively reinstates -- for the moment -- U.S. District Judge Oliver Gasch's 1983 ruling that The Post did not libel the Mobil executive in a 1979 article about his business dealings.
In the first of a series of seesaw decisions in the case, Gasch overturned a jury's verdict favoring Tavoulareas and awarding him $2,050,000 in damages.
The full appellate court, in a two-page order, gave no explanation as to why it decided to rehear the complex, long-running case. No timetable was set for the reconsideration, although legal arguments are not likely to be held until next fall.
Post executives and press advocates greeted the decision with cautious optimism that the full court would eventually rule in the newspaper's favor and voiced particular delight that the 2-to-1 decision in April for Tavoulareas had been rescinded.
The 65-year-old Tavoulareas, who retired as president of Mobil's holding company last November, said, "In a case of this importance, it is not surprising that the full court would want to hear it." His chief lawyer, John J. Walsh of New York, said, "We're confident we can convince a majority of the full court that the decision of the three-judge panel was correct."
That decision, written by Senior Circuit Judge George E. MacKinnon, said, to the dismay of many news executives, that it was relevant for juries in libel cases to consider whether newspapers such as The Post might be reckless in preparing a story because of their general pursuit of "hard-hitting investigative stories."
Boisfeuillet Jones Jr., The Post's general counsel, said the newspaper was "relieved that the full court will take a clean look at the case. We're also relieved that an opinion which seemed inconsistent with meaningful appellate review of jury verdicts is wiped off the books."
While the MacKinnon decision only set a binding legal precedent in the District of Columbia, people suing newspapers elsewhere had already started citing it in support of their cases.
Henry R. Kaufman, general counsel for the Libel Defense Resource Center, said the full appellate court's order "does away with that potential ripple effect" of the panel's ruling.
Floyd Abrams, a First Amendment lawyer who in the past has represented the New York Times and NBC, said, "It's a significant step for the court to rehear the case in light of the fact that the decision of Judge MacKinnon is so clearly hostile to the practice of journalism."
But he cautioned against concluding that the decision to rehear the case means that a majority necessarily wants to overturn the MacKinnon decision.
Michael McDonald, a lawyer for the American Legal Foundation, a conservative group that assists people who sue the media for libel, said the full appellate court seems to have been "influenced by the wide amount of unfavorable reaction" to the earlier decision. "There's really no basis to rehear it and the panel should not be second-guessed by the full court," he said.
The seven jurists who voted to consider the case were Chief Judge Spottswood W. Robinson III; Judge J. Skelly Wright, who dissented from the MacKinnon ruling, and Judges Patricia M. Wald, Abner J. Mikva, Harry T. Edwards, Ruth Bader Ginsburg and Kenneth W. Starr.
Judge Antonin Scalia, who joined MacKinnon in his earlier decision, and Judge Edward A. Tamm voted against the rehearing. Judge Robert H. Bork, without explanation, did not participate in yesterday's decision and has recused himself from the rehearing.
In addition to the nine judges who voted on whether to rehear the case, MacKinnon, a senior judge, will join the full court since he participated in the first appellate decision.
MacKinnon, joined by Scalia, issued a separate 18-page opinion yesterday stating why no rehearing by the panel should be held. They rejected the newspaper's claim that the April decision was "a manifestation of hostility towards investigative journalism." The full court's order yeserday also vacated that separate opinion by MacKinnon and Scalia.
The disputed Tavoulareas story, written by reporter Patrick Tyler, was published on Nov. 30, 1979. It 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 through an intermediary operated some of Mobil's ships. The Tavoulareases both sued the newspaper, but the jury found three years ago that the newspaper had libeled only the elder Tavoulareas.
In a companion case, the full appellate court also voided MacKinnon's and Scalia's judgment that the elder Tavoulareas' former son-in-law, Dr. Philip Piro, an eye surgeon and an initial source for the Tyler story, had slandered Tavoulareas. That case will be reheard by the full court as well.
However, the full court left standing the panel's decision that free-lance reporter Sandy Golden could not be found liable for the article in The Post.