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Stevenson v. Hearst Consol. Publications Inc.

decided.: July 27, 1954.


Author: Hincks

Before FRANK, MEDINA and HINCKS, Circuit Judges.

HINCKS, Circuit Judge.

The jurisdiction of the court below is based on diversity of citizenship, the appellee (whom we shall occasionally designate as the plaintiff) being a citizen of the State of New York and the appellant (defendant below) a Delaware corporation which publishes in the City of New York a newspaper, the "New York Journal-American."

The libel complained of was published in the following circumstances. The plaintiff's wife, from whom he was estranged, had served, but not yet filed, a separation suit against him in the New York Supreme Court. Thereafter she filed in the New York Supreme Court a motion for temporary alimony, hearing on which had been adjourned until August 13, 1948, at which time on order of court it was permitted to be withdrawn. On that day the defendant's reporter, Cohen, went to the anteroom of the Courtroom in which Justice Greenberg had heard the morning's motion calendar. Seeing upwards of twenty files on the table he asked permission of Justice Greenberg to look at them, without mention of matrimonial files in general or the Stevenson file in particular. To this the Justice replied, "Well, go right ahead," whereupon the reporter without further formality examined the Stevenson file including Mrs. Stevenson's supporting affidavit wherein she charged the plaintiff, in intimate detail, with inexcusable neglect of herself, as his wife, as well as with unconventional association with other women. Some five days later the reporter, who knew throughout that the motion for alimony had been withdrawn, provided the defendant with a story which purported to be a resume of the charges contained in the wife's affidavits. This story which was published in the New York Journal-American on August 19, 1948, is the publication here complained of.

The appellant in its amended answer to the complaint pleaded as "partial defenses" a "fair and true" news report and a belief reasonably induced by communications from reliable sources that its publication was true. By pre-trial order, the issues to be tried were limited to the issue of damages thus in effect eliminating privilege as a defense in bar. No error is predicated on that order on this appeal. Indeed, the appellant on its brief on appeal concedes that the publication was not privileged, doubtless impelled to that concession, as indeed its brief shows, by the impact of Stevenson v. News Syndicate Co., 302 N.Y. 81, 96 N.E.2d 187.

The story as published made no mention of the withdrawal of the motion; it incorrectly spoke of the charges therein as made "today" clearly implying that the motion was still pending. In sensationalized language, it unmistakably implied that the plaintiff was living in an illicit relationship with one of his office secretaries whom it named, although the wife's affidavit went no farther than to charge marital neglect and indiscreet and unconventional association with the woman named and others. The published story, because of this and other variations from the affidavit which it purported to report, was not privileged as a fair and true report of news: it was so held in Stevenson v. News Syndicate Co., supra, and we should so hold here if error had been predicated on the order below which eliminated privilege as a defense.

The appellant now contends that the amended complaint is so lacking in specificity that there is no adequate support for the jury's finding of special damages in the amount of $24,000. F.R.C.P. 9(g), 28 U.S.C.A., requires that items of special damages when claimed "shall be specifically stated." The amended complaint alleged that as a direct result of the publication the plaintiff's employer, a nation-wide corporation of which the plaintiff was the treasurer at an annual salary of $19,000, in October, 1948, compelled his resignation so that he thereby lost his position with its concomitant salary, except for one year's salary allowed him on separation, and that, despite diligent effort, the plaintiff thereafter was unable to obtain a higher salary that $10,000. It alleged further that as an incident of his involuntary resignation the plaintiff, then aged 42, lost an annual pension of $9,671 (with possible increment in the event of a subsequent increase in salary) to which he would have been entitled if he had retained his position until 65 years of age. $300,000 in special damages were claimed.

As pointed out in Moore's Federal Practice (2d Ed.) Sec. 9.08, when it comes to pleading special damages there is a distinction between cases in which special damage is essential to the cause of action and cases in which a cause of action exists irrespective of special damage. The cases cited by appellant all fall into the former category. Here we have to do with a publication which, since not privileged as a fair news report, was libelous per se under the applicable law of New York. Stevenson v. News Syndicate Co., 302 N.Y. 81, 96 N.E.2d 187. See Seelman on Libel and Slander, Sec. 372. This being so, an allegation of special damage, under the law of New York, was not essential to make out a cause of action. A valid cause of action having been stated, we hold that the complaint sufficiently stated special damages within the requirements of Rule 9(g) which governs pleadings in the federal courts.

The appellant urges further that there was insufficient evidence to prove that the plaintiff's loss of employment was proximately caused by the publication complained of. In support of its position on this claim of error the appellant points to considerable evidence which, if considered alone would have supported a finding that the plaintiff's discharge was the consequence not of the published defamation but of the breach by the plaintiff of a "promise" given prior to the publication to his superior corporate officer to discontinue his association with the woman named. But the corporate officer (Gibson) to whom alone this promise was allegedly made failed to testify unequivocally to its existence. He said only that some six months before the publication he had "asked him to cease going with the girl" and was left with "the impression that he would not see" her again, etc., and definitely denied that the plaintiff had made any "pledge or * * * promise" not to see her. Another, the chief corporate officer, Francis, testified that Gibson had indicated to him that "in his (Gibson's) judgment" the plaintiff had broken a promise and that in direct conversation with the plaintiff after the publication, the plaintiff had admitted the promise but denied that he had violated it since he had done nothing wrong. The plaintiff, himself, on the trial, denied that he had made such a promise, testifying that he had indicated only an intent to discuss the subject-matter of their relationship with the woman involved. On such evidence the jury surely was not constrained to find a broken promise by the plaintiff.

But whether or not such a promise had ever been made, there was abundant evidence from which the jury could properly find that the plaintiff's discharge was a foreseeable consequence of the defamation. Cf. Prosser on Torts, page 809. The minutes of the meeting of the corporate executive committee which accomplished the discharge contained a recital by the corporate chairman that "after careful review of the facts it was clear that there was no question whatever about Mr. Stevenson's technical competence and that his affairs with the company were in perfect order." On trial, the corporate chairman testified to a discussion with the executive vice-president as to whether the plaintiff's "reputation had been impaired enough by this publicity to take any action."*fn1 On August 28, 1948, at a meeting of the executive committee a print of the publication was read at least in part and thereupon the plaintiff was given leave of absence for three months. The corporate chairman testified that plaintiff's reputation in New York had been hurt at least amongst corporate personnel in New York. The employer-corporation, itself, after plaintiff's discharge, offered him employment outside of New York and top executives were cooperative in his efforts to find other employment.

The effect of this evidence which strongly supported the finding is weakened little, if at all, by evidence that the plaintiff's private life was the sole cause of his discharge. True, there was evidence of belief that "his personal conduct had been such that he had lost the respect of the organization generally." But we find no evidence at all that this loss of respect existed prior to the publication. It is at least implicit in the evidence that the plaintiff's conduct, in view of his marital status, had been indiscreet long before the publication. But not until the publication occurred charging something more serious than unconventional conduct did the company take action to his hurt. Whether the corporate officers themselves believed the defamatory imputations of the publication is immaterial if - as they testify - they took action because of plaintiff's resulting loss of repute in the eyes of the personnel generally.

The appellant further predicates numerous claims of error upon rulings on the evidence. It attacks particularly the ruling excluding the complaint in the separation suit contending that it was admissible as matter "tending but failing to prove the truth" of the published charge and hence available to it "not in mitigation but reduction of damage." We hold, however, that the ruling was proper. The complaint, though pending, had never been filed and hence was not subject-matter of a privileged news report. May v. Syracuse Newspapers, 250 App.Div. 155, 294 N.Y.S. 867. Of course, the complaint was inadmissible as hearsay to prove the truth of its contents. And we cannot perceive how proof only of unfiled and unpublished charges made by the plaintiff's wife, which the appellant was not privileged to publish, could have had any bearing on malice or on any other open issue or a rational tendency either to mitigate or reduce the damages resulting from what the appellant did wrongfully publish. The case is not one in which the plaintiff ascribed deterioration in his matrimonial relations to the publication.

The appellant also criticizes rulings admitting the testimony of an actuary as to the present worth of sums representing, respectively, (a) the difference between the salary which the plaintiff would have received from his employer if he had remained in its employ at the same salary until 65 years of age, and the reduced salary (plus bonus) which the plaintiff was receiving from his new employer if continued at the same rate until the attainment of 65 years, and (b) the difference between his future pension rights based on the contributions which his former employer would have made under its existing pension plan had he remained in its employ until 65, and his pension rights based on his new employer's contributions under its existing pension plan if continued for a similar period. The contention is that such testimony, obviously offered on the issue of special damages, was inadmissible because based on unsupported assumptions as to the proper rate of discount for determining present value and as to what would have been the duration of plaintiff's employment by his old employer, but for the libel, or the duration (1) of his future employment with his new employer, (2) of his loss of reputation and reduced earning power, and (3) of the existing pension plans which as to future-accruing rights might be discontinued at the employers' option.

All objections based on such contentions we hold to have been properly overruled. There was highly credible evidence of plaintiff's history of business competence from which the jury might estimate the probable duration of his future employment. The actuary's figures were discounted - properly so for aught that appears - to reflect the possibility of death before 65. And a tort claimant is not to be held to the well-nigh impossible burden of proving future damages with more certainty than that attaching to plaintiff's proofs here. The actuary stated evaluations based not only on a 2% rate, but also on a 3% and a 4% rate. It was left to the jury - and properly so on the record here - to decide which rate was appropriate and it was open to the appellant to offer evidence on that point. The jury was not bound by the testimony of plaintiff's actuary. And the award of special damages in the amount of $24,000 indicates ...

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