VEGOD CORPORATION v. AMERICAN BROADCASTING COMPANIES INC

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Court of Appeal, First District, Division 1, California.

VEGOD CORPORATION et al., Plaintiffs and Appellants, v. AMERICAN BROADCASTING COMPANIES, INC., et al., Defendants and Respondents.

Civ. 42363.

Decided: January 08, 1979

Hoberg, Finger, Brown, Carlson, Cox & Molligan, Peter N. Molligan, James Geagan, San Francisco, for plaintiffs and appellants. Lillick McHose & Charles, Robert Fremlin, Robert Kavanaugh, Gail Heckemeyer, San Francisco, for defendants and respondents American Broadcasting and Lund. Tolpegin & Imai, Andre V. Tolpegin, San Francisco, for defendants and respondents Better Business Bureau, Thurber and Keefer.

Vegod Corporation and Western Institute of Retailing, Inc., commenced an action for damages for slander against American Broadcasting Companies, Inc., American Broadcasting Company KGO-TV Channel 7, Better Business Bureau of San Francisco, certain of those defendants' employees, and others. Concluding that the plaintiffs were “public figures,” and upon being advised that they were unable to prove the defendants' “actual malice” within the requirement of New York Times Co. v. Sullivan (1964) 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, the superior court entered judgments in favor of the defendants. Plaintiffs thereupon appealed.

The uncontroverted facts before the superior court and reasonable inferences therefrom were as follows.

The “City of Paris” was a well-known and long-respected San Francisco department store. Its age equaled that of the State of California; its doors were first opened in 1850. Apparently drawing upon judicial knowledge (see Evid.Code, s 451, subd. (f)), the superior court described it as a “landmark store,” and counsel seemed in agreement that it was a highly regarded “department store that has been in San Francisco since the Gold Rush, that is famous for its Christmas celebrations that children of every age of San Francisco had been going to for years, . . .” But the “demise” of the store, in 1972, was imminent; the news media had widely reported that it soon would go out of business.

Plaintiffs are Vegod Corporation and Western Institute of Retailing, Inc., to whom collectively and for convenience we shall hereinafter refer in the singular as Vegod. Vegod had a common management, and to a large extent, common ownership. Vegod's “main business was the ‘closing out’ of . . . stores” that had failed, or were otherwise going out of business. Arrangements of some kind were made with the City of Paris for Vegod to conduct a “closing out,” and “total,” sale of its merchandise. The sale received wide newspaper advertising of the bargains to be found in the City of Paris' merchandise inventory. In the course of the “closing out” sale, merchandise was brought into the store for sale by Vegod from as far away as Chicago. Indeed, “both plaintiffs brought in merchandise to the City of Paris from other stores, . . .” And space was rented by Vegod to concessionaires who themselves “brought in merchandise in accordance with their own merchandising practices and procedures.”

An official of Better Business Bureau of San Francisco interviewed a “KGO-TV Channel 7” news reporter. He advised her, among other things, that “shoppers who visited the City of Paris were likely to find ‘distress' and out-of-season merchandise instead of the high-quality clothing normally offered by the store. (He) also stated that garments bore misleading tags which made it appear that clothing offered for sale at its full retail price was discounted in price,” and that the price of merchandise offered to the public might be four times the price paid by Vegod.

Thereafter, upon notice to Vegod of the intent so to do in compliance with some official regulations, the reporter, with the approval of KGO-TV Channel 7, broadcast the following news report:

“The City of Paris has always been a trusted San Francisco institution with a well-earned reputation for honesty a store can only get through many years of treating the public fairly, but the Better Business Bureau has revealed exclusively to Newscene that it is not the trusted City of Paris management that's running the close-out campaign. The watchdog agency says two outside companies, Vega (Sic ) Corporation and Western Institute of Retailers (Sic ), have been brought in to handle the close-out, a close-out the Better Business Bureau says has deceived the public that trusts the name City of Paris and promises bargains that are not really bargains at all.”

That broadcast, and some others which were similar in context, were the subjects of Vegod's action.

Pretrial conferences were held between the court and counsel for the respective parties. The discussions centered around whether Vegod was a “public figure” required by law to prove “actual malice” on the part of the defendants. Vegod, as previously indicated, conceded an inability to prove such “actual malice” by “clear and convincing evidence.” After appropriate argument on the issue, the here questioned judgments were entered.

New York Times Co. v. Sullivan, supra, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, in 1964 announced the rule that a “Public official ” is prohibited “from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with ‘actual malice’ that is, with knowledge that it was false or with reckless disregard of whether it was false or not.” (Pp. 279-280, 84 S.Ct. p. 726.) And, said the court, the proof of such “actual malice” must be made with “convincing clarity.” (Pp. 285-286, 84 S.Ct. 710.)

Three years later the high court extended its rule to include “public figures.” In Curtis Publishing Co. v. Butts (1967) 388 U.S. 130, 155, 87 S.Ct. 1975, 1991, 18 L.Ed.2d 1094, the court asserted: “We consider and would hold that a ‘public figure’ who is not a public official may also recover damages for a defamatory falsehood whose substance makes substantial danger to reputation apparent, on a showing of highly unreasonable conduct constituting an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers.” The court carefully added: “Nothing in this opinion is meant to affect the holdings in New York Times and its progeny, . . .”

A person may attain the status of a “public figure” in either of two ways, according to Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 351, 94 S.Ct. 2997, 3013, 41 L.Ed.2d 789: “That designation may rest on either of two alternative bases. In some instances an individual may achieve such pervasive fame or notoriety that he becomes a public figure for all purposes and in all contexts. More commonly, an individual voluntarily injects himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited range of issues. In either case such persons assume special prominence in the resolution of public questions.” (Emphasis added.)

It is the latter of the “two alternative bases” with which we are here concerned.

Some confusion attended the superior court proceedings of this case. The parties appear to have understood Gertz v. Robert Welch, Inc. as Necessarily requiring a “public Controversy ” for the application of that authority's second alternative.

In Gertz v. Robert Welch, Inc., there happened to have been a public Controversy into which the court specifically found the plaintiff had not injected himself, and it accordingly addressed itself to the issue in what was there appropriate language. But from similar high authority it becomes manifest that the meaning is A matter of “public interest” which, of course, includes “public controversy.” Thus, in Curtis Publishing Co. v. Butts, supra, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094, where there had been no controversy before the claimed defamation of a “public figure,” the members of the court described the criteria as those of “public interest,” and the public's “legitimate and substantial interest.” (Pp. 149, 154-155, 165, 87 S.Ct. 1975.) Likewise in Time, Inc. v. Hill (1967) 385 U.S. 374, 383-387, 87 S.Ct. 534, 17 L.Ed.2d 456, the court spoke only of “public interest,” and “substantial public interest,” as the necessary element of New York Times Co. v. Sullivan ‘s First Amendment privilege.

Lesser federal courts have variously described the required element as a matter of “public interest” (Man v. Warner Bros. Inc. (S.D.N.Y.1970) 317 F.Supp. 50, 52-53; Konigsberg v. Time, Inc. (S.D.N.Y.1970) 312 F.Supp. 848, 851), “great public interest” (Dacey v. Florida Bar, Inc. (5th Cir. 1970) 427 F.2d 1292, 1295; Bon Air Hotel, Inc. v. Time, Inc. (5th Cir. 1970) 426 F.2d 858, 861), “legitimate public interest” (Bon Air Hotel, Inc. v. Time, Inc., supra, p. 861, fn. 3; Martin Marietta Corp. v. Evening Star Newspaper (D.D.C.1976) 417 F.Supp. 947, 956), “public or general concern” (Rosanova v. Playboy Enterprises, Inc. (S.D.Ga.1976) 411 F.Supp. 440, 444), or “ ‘in which the public has a justified and important interest’ ” (Cepeda v. Cowles Magazines and Broadcasting, Inc. (9th Cir. 1968) 392 F.2d 417, 419 (cert. den., 393 U.S. 840, 89 S.Ct. 117, 21 L.Ed.2d 110)), or which is “naturally entitled to public gaze and interest” (United Medical Laboratories v. Columbia Broadcasting Sys. (9th Cir. 1968) 404 F.2d 706, 712 (cert. den., 394 U.S. 921, 89 S.Ct. 1197, 22 L.Ed.2d 454)). No such authority is found which requires a “public Controversy.”

We continue our consideration of Gertz v. Robert Welch, Inc.‘s second basis for status as a “public figure,” i. e., where the “individual voluntarily injects himself” into a matter of public interest. Such a party, while not “a public figure for all purposes” (Martin Marietta Corp. v. Evening Star Newspaper, supra, 417 F.Supp. 947, 957), is nevertheless “a public figure for a limited range of issues” (418 U.S., p. 351, 94 S.Ct. p. 3013). Having voluntarily injected himself into a matter of public interest, he becomes a “public figure” in respect of that matter, within the meaning of New York Times Co. v. Sullivan, Curtis Publishing Co. v. Butts, and Gertz v. Robert Welch, Inc.

We point to a few illustrations where one seeking damages for defamation has been held a “public figure” within the meaning of this rule.

Dacey v. Florida Bar, Inc., supra, 427 F.2d 1292: Dacey, a private person and author, who made many radio and television appearances promoting his book, thereby became a “public figure” unentitled to damages for lack of proof of actual malice, following a personal defamatory attack upon him in a review of the book. Martin Marietta Corp. v. Evening Star Newspaper, supra, 417 F.Supp. 947: An otherwise private corporate contractor, by engaging in national defense contracts, thereby became a “public figure,” subject to New York Times Co. v. Sullivan ‘s required proof of actual malice, in a defamation action against a newspaper which had published a story of its alleged improper relations with government officials. Buchanan v. Associated Press (D.D.C.1975) 398 F.Supp. 1196: Buchanan, a privately practicing accountant, voluntarily involved himself in a political campaign. He was held a “public figure” in respect of claimed libelous publications relating to the campaign's irregular financing. Rosanova v. Playboy Enterprises, Inc., supra, 411 F.Supp. 440, 442: Rosanova, a private person, who disported himself with notorious underworld figures, thereby attained the status of a “public figure” in respect of a defamatory publication referring to a “ ‘host of California mobsters, including . . . Rosanova.’ ” Man v. Warner Bros. Inc., supra, 317 F.Supp. 50: Man, a private person and musician, became a “public figure” in relation to a “Woodstock Festival” where he voluntarily performed before many people, thus foregoing claim for damages against Warner Bros. Inc. for filming and recording his rendition for profit.

Vegod relies heavily upon the cases of Time, Inc. v. Firestone (1976) 424 U.S. 448, 96 S.Ct. 958, 47 L.Ed.2d 154, and Gertz v. Robert Welch, Inc., supra, 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789, where the allegedly defamed persons were not held to New York Times Co. v. Sullivan ‘s strict requirement of establishing actual malice. We find them to be of no aid to Vegod. In Time, Inc. v. Firestone, the high court found the Firestones' divorce dispute was “not the sort of ‘public controversy’ referred to in Gertz” (p. 454, 96 S.Ct. p. 965) even though of morbid interest to some. And the court expressly concluded that by their appearance in the divorce action the parties had Not “ ‘Voluntarily exposed (themselves) to increased risk of injury from defamatory falsehoods, . . .’ ” (p. 456, 96 S.Ct. p. 966; emphasis added.) In Gertz v. Robert Welch, Inc., a lawyer had represented the family of a homicide victim in a civil action against his alleged murderer. His participation in the over-all affair “related solely to his representation of a private client” (p. 352, 94 S.Ct. p. 3013), and he had taken no part in the criminal prosecution resulting in a murder conviction. The high court stated: “He plainly did not thrust himself into the vortex of this public issue, nor did he engage the public's attention in an attempt to influence its outcome. We are persuaded that the trial court did not err in refusing to characterize petitioner as a public figure for the purpose of this litigation.” (418 U.S., p. 352, 94 S.Ct., p. 3013.) In neither of these cases had the allegedly defamed person become Voluntarily involved in a matter of public interest.

The need that a private person Voluntarily inject himself into a matter of public interest in order to acquire “public figure” status has otherwise been manifested by the nation's high court. In Gertz v. Robert Welch, Inc., the court expressly repudiated its earlier plurality opinion holding that “a private citizen Involuntarily (emphasis added) associated with a matter of general interest has no recourse for injury to his reputation unless he can satisfy the demanding requirements of the New York Times test.” (418 U.S., pp. 337-339, 94 S.Ct. p. 3006; and see Trans World Accounts, Inc. v. Associated Press (N.D.Cal.1977) 425 F.Supp. 814, 818-819; Rosanova v. Playboy Enterprises, Inc., supra, 411 F.Supp. 440, 443.)

Vegod's only contention on its appeal is expressed in this manner: “The court erred in classifying plaintiffs Vegod and (Western Institute of Retailing, Inc.) as ‘public figures' within the meaning of Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 . . . and Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789, . . .”

That determination was, of course, a question of law for the superior court as it is now for this court. (Rosenblatt v. Baer (1966) 383 U.S. 75, 88, 86 S.Ct. 669, 15 L.Ed.2d 597; Rosanova v. Playboy Enterprises, Inc., supra, 411 F.Supp. 440, 444; Hotchner v. Castillo-Puche (S.D.N.Y.1975) 404 F.Supp. 1041, 1045; Walker v. Colorado Springs Sun, Inc. (Colo.1975) 538 P.2d 450, 459 (cert. den., 423 U.S. 1025, 96 S.Ct. 469, 46 L.Ed.2d 399).)

From the foregoing uncontroverted evidence and discussion we conclude as a matter of law: (1) that the “demise” of the “City of Paris” and the disposition of its merchandise were matters of legitimate “public interest”; (2) that Vegod, an otherwise private person, voluntarily injected itself into those matters of public interest by its widespread advertising, and its management, of the store's “close out” sale; and (3) that Vegod thereby became a “public figure” within the meaning of Curtis Publishing Co. v. Butts and Gertz v. Robert Welch, Inc.

Vegod accordingly had the burden of establishing by evidence of convincing clarity that the defendants acted with “actual malice” in respect of the alleged defamatory television news reports. Vegod having conceded an inability to do so, the superior court did not err in entering judgments for the several defendants.

We have found it unnecessary to our disposition of Vegod's appeal to consider the limitation, if any, upon a corporation's right, as distinguished from that of an individual, to recover for wrongful defamation. (Cf. Trans World Accounts, Inc. v. Associated Press, supra, 425 F.Supp. 814, 818.) Nor have we drawn the suggested distinction between the Better Business Bureau of San Francisco's right of free speech, and the other defendants' guaranteed freedom of the press. “(I)t is immaterial whether the words be publicly spoken from the stage or upon the hustings, or go out to the world through the channels of the printing press. By the constitutional provision we are about to invoke, a citizen may speak, write, or publish his sentiments with equal freedom, . . .” (Dailey v. Superior Court (1896) 112 Cal. 94, 96-97, 44 P. 458, 459; In re Lyons (1938) 27 Cal.App.2d 293, 299, 81 P.2d 190.) And the “Supreme Court of the United States has made it clear that there is little essential difference between freedom of speech as opposed to freedom of press. The two freedoms have been amalgamated in language such as ‘. . . constitutional limits of free expression . . .’ (Pennekamp v. State of Florida, 328 U.S. 331, 335, 66 S.Ct. 1029, 1031, 90 L.Ed. 1295 (1946)) . . .” (Klahr v. Winterble (1966) 4 Ariz.App. 158, 418 P.2d 404, 415.)

The judgments, and each of them, are affirmed.

I dissent.

With all respect to my colleagues, theirs is an unwarranted extension of the rationale of New York Times v. Sullivan, Curtis and Gertz.*

The plaintiff here is a liquidator, not a legislator, and no salutary public purpose is served by conferring so broad an immunity on its alleged detractors.

Nor can I agree that the shadowy extensions expressed in decisions of the lower federal courts justify applying Sullivan immunity in mere matters of “public interest.” This highly subjective phrase, vague as it is, I take in any event to mean matters which a federal judge at some point in the past had deemed to be of “public interest,” i. e., an entertainer consorting with gangsters (Rosanova v. Playboy Enterprises, Inc., 411 F.Supp. 440); an accountant involved in a political campaign (Buchanan v. Associated Press, 398 F.Supp. 1196); an entertainer at a celebrated music festival (Man v. Warner Bros. Inc., 317 F.Supp. 50).

The press has and ought to have absolute freedom to say what it will of any man, but I would be more cautious in immunizing abuses of such vast powers and removing citizens' rights of redress.

I may say finally that the historicity of the building in which the appellant held its business in my view adds nothing to the alleged public interest in such activity. Ironically, segments of the press and media have long urged that the City of Paris be razed to make way for a new department store.

I would deny the judgments.

FOOTNOTES

FOOTNOTE.  New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686; Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094; Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789.

ELKINGTON, Associate Justice.

RACANELLI, P. J., concurs.