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RUDIN v. DOW JONES & CO.
February 24, 1983
MILTON A. RUDIN, Plaintiff,
DOW JONES & COMPANY, INC., Defendant
The opinion of the court was delivered by: LASKER
Milton Rudin, an attorney, businessman and philanthropist whose clients include many of the world's most celebrated show-business personalities, brings this defamation action against Dow Jones & Company ("Dow"), the publisher of "Barron's Business and Financial Weekly" ("Barron's"), based upon a caption that Barron's attached to a letter to the editor written by Rudin and published in the January 15, 1979 issue of Barron's. The undisputed facts are as follows:
On November 27, 1978, in its regular column "Up & Down Wall Street," Barron's commented on the purchase of stock in the Great Lakes Dredge and Dock Company by a group including Frank Sinatra, Jr., Rudin, and three others:
"A GAMBLING stock it isn't, But then, Great Lakes Dredge and Dock would scarcely be mistaken for a Vegas casino. As for Atlantic City, we suspect that the closest the company would come to that spa is if perchance one of its dredges were working offshore. So why would Frank Sinatra and a group of four others, including his attorney, Milton Rudin (who not long ago joined Sinatra in buying a huge stake in Del Webb and eventually gaining a board seat before disposing of their stock this year to Ramada Inns), plunk down a cool $2.8 million to buy 107,500 shares, or slightly over 5% of the outstanding stock, of Great Lakes?
The 13D filed with the SEC by Sinatra & Friends avers that the stock was purchased for 'investment purposes.' The folks at Great Lakes Dredge can't shed any more light on the matter, either. They report that business is good, profits are at record levels and the backlog is high. But as to why old Blue Eyes et al acquired the block of stock, an executive declares, 'We've no idea whatsoever.' Our efforts to reach the singer and others were to no avail. One thing we do know. Say what you want about Great Lakes Dredge, a fine old company with a respectable record, show biz it's not."
Barron's, November 27, 1978, p. 38 (Pl. Ex. 1).
In response to the publication of this item, Rudin wrote to Barron's on January 2, 1979, and invited Barron's to publish his letter. The letter, without the two final paragraphs, was published on January 15, 1979 in the column "Barron's Mailbag," which consists of letters to the editor. Barron's caption for the letter was "SINATRA'S MOUTHPIECE." The letter appeared as follows:
I have finally found time to deal with trivia; I am referring to the article which appeared in the Nov. 27 issue of your publication concerning the purchase by Harvey Silbert, Frank Sinatra, Jerry Weintraub and myself of over 100,000 shares of Great Lakes Dredge & Dock Co.
Your article seems to indicate that neither Mr. Sinatra and I, nor the other individuals joining us in filing as 'a group,' have a limited amount of intelligence. Obviously, you are of the view that we can only understand gambling stocks or securities of companies involved in the entertainment industry.
But it astounds me that your staff, writing for a publication that claims that it reports accurately on matters relating to investments, did not have intelligence to understand why we purchased Great Lakes. In addition to being unintelligent, they are evidently very lazy.
If your writer had examined the 13D filed with the SEC, he would have noted that initial purchases were made by Mr. Sinatra and myself at a cost basis of approximately $22 a share. Also, the subsequent purchases were made under $30 a share.
On the basis of $22 a share, and noting that Great Lakes paid a dividend of $2.50 a share in 1978, your reporter, if he completed sixth grade education, would have been able to note that we are getting a 10% return on our investment.
We bought the stock prior to the announcement that Great Lakes' earnings would be approximately $7 a share. Because we don't read Barron's, I guess we very stupidly invested in this stock, which at present price levels is yielding about 7% per annum and selling at a modest multiple of five times earnings.
Beverly Hills, ...
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