BLATTY v. NEW YORK TIMES COMPANY

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Court of Appeal, Second District, Division 7, California.

William Peter BLATTY, Plaintiff and Appellant, v. NEW YORK TIMES COMPANY, Defendant and Respondent.

Nos. B008737, B010053.

Decided: December 12, 1985

Coleman & Farrell and Richard M. Coleman, Los Angeles, for plaintiff and appellant. Gibson, Dunn & Crutcher, Richard P. Levy, Gail E. Lees and William C. Foutz, Los Angeles, and David A. Thurm, for defendant and respondent.

William Blatty sued the New York Times Company for damages on several theories, all of which were based on defendant's failure to include in its best seller list a book written by plaintiff.   The trial court sustained defendant's general demurrer to the first amended complaint without leave to amend.   Plaintiff appeals from the ensuing judgment of dismissal.  (No. B008737.)   He also appeals from order denying his motion to tax costs made after judgment.1  (No. B010053.)   Pursuant to plaintiff's motion we ordered that the appeals be consolidated.

FACTS

IORIGINAL COMPLAINT AND PROCEEDINGS THEREON

The original complaint contained four causes of action.   The first cause of action (negligent interference with prospective business advantage) included the following allegations:  Defendant owns, publishes and distributes the newspaper New York Times and publishes weekly therein a list entitled “Best Sellers” purporting to rank best selling books, fiction and nonfiction, based on actual sales.   Authors whose works appear on the list have a significant and valuable prospective business advantage in promoting and maximizing the sales of such books in both hardback and paperback editions, and the sale of movie rights to such books.   Although the list purports to rank books on the basis of sales and expresses no opinion on their merits, the reputation of the New York Times and its perceived expertise in literary matters are such that many book sellers promote, and many persons purchase, current works of fiction primarily because they are included in the list.   Defendant knew or should have known that the list has such influence on the sale and promotion of books.   Plaintiff authored, and Simon and Schuster published, a new work of fiction entitled “Legion” which sold more than sufficient copies to warrant inclusion in the list and otherwise met all criteria for such inclusion.   Defendant negligently failed to include “Legion” in the list, thereby depriving plaintiff of the prospective advantage which he otherwise would have obtained.

The second cause of action (intentional interference with prospective business advantage) alleged:  Acting on plaintiff's behalf, Simon and Schuster provided defendant's management employees with information that “Legion” had sold more than sufficient copies to warrant inclusion in the list, and requested that “Legion” be included;  despite such information defendant, intentionally or recklessly and without cause, refused to include “Legion” in the list;  as a result plaintiff suffered damage by loss of the advantage he otherwise would have obtained.

The remaining causes of action (negligence and trade libel) incorporated most of the foregoing allegations of the first and second causes of action.

Less than two months after filing the complaint plaintiff noticed the taking of depositions and the production of documents.   Thereafter defendant filed a general demurrer to the complaint.   Plaintiff moved for an order compelling the taking of the depositions and the production of documents previously noticed, asserting his right to discovery despite the pendency of the demurrer.   In support of the motion plaintiff submitted his declaration which incorporated by reference an attached newspaper article presumably intended to show the relevancy of the proposed discovery.   The newspaper article caused the trial court to question the allegation that defendant refused to include “Legion” in the best seller list despite the information furnished to it by Simon and Schuster.   The court stated that it could not rule on the demurrer until it was sure that such allegation was supported by admissible evidence.   Accordingly, on the court's insistence and over plaintiff's objection, the parties took depositions of an employee of Simon and Schuster and an employee of defendant limited to the issue of the nature of information about sales of “Legion” allegedly supplied by Simon and Schuster to defendant.

The court took judicial notice of the depositions and concluded they contained no evidence that Simon and Schuster supplied defendant with any figures of sales of “Legion”.   The demurrer to the second cause of action was sustained with leave to amend to allege facts showing that (1) defendant “violated its public duty or trust to sell or distribute its newspaper to the public containing a fair and honest report of all news without bias or prejudice”;  and (2) defendant had in its possession reports of the actual sales of “Legion” which would qualify the book for inclusion in the best seller list and nevertheless deliberately refused to list it.2  The demurrer to the remaining causes of action was sustained without leave to amend on the ground that defendant had no duty to include a book in the list except as indicated above, and those causes of action did not allege facts showing such a duty.

II

FIRST AMENDED COMPLAINT AND PROCEEDINGS THEREON

In the amended complaint plaintiff again attempted to state a cause of action for intentional interference with prospective advantage, and set forth three additional theories of liability.

The first and second cause of action (both labeled intentional interference with prospective advantage) repeated in essence the allegations of the original complaint regarding defendant's publication of the best seller list and the prospective advantage accruing to authors whose books appear on the list.   They further alleged:  Defendant expressly and impliedly advertised and represented to authors, book sellers and the general public that the list was an objective, unbiased and accurate compilation of actual sales of books each week by 2,000 book stores in every region of the United States.   Defendant knew such representation was false because, among other things, defendant did not use actual sales in compiling the list but rather used an undisclosed method of “weighting” certain sales more than others.   In July or August 1983 Simon and Schuster, acting on plaintiff's behalf, contacted management employees of defendant and told them it had sales figures showing that “Legion” qualified for the list.   Defendant intentionally, or recklessly and without cause, refused to review such figures and to include “Legion” in the list for many weeks thereafter.   In September 1983 defendant included “Legion” in the list for one week only, and then in last position.   As a result of defendant's acts plaintiff was deprived of the prospective advantage which he otherwise would have obtained;  he thereby sustained damages in excess of $3 million through lost sales of and higher promotional expenses for “Legion,” lost value in paperback editions and lost value in movie rights.   Defendant acted maliciously and with intent to deprive plaintiff of his rights and property by refusing to include “Legion” in the list for many weeks during which it qualified for inclusion.   Accordingly, plaintiff is entitled to punitive damages of not less than $3 million.3

Each of the subsequent causes of action incorporated most of the foregoing allegations.   The third and fourth causes of action (unfair competition, and false and misleading advertising, respectively) alleged that defendant's representations concerning the list constituted fraudulent business practices, false and misleading statements, and untrue and misleading advertising which deceived consumers as to the popularity of books available for sale, all in violation of Business and Professions Code section 17200 et seq. and section 17500 et seq.   As a result many book sellers and consumers who otherwise would have purchased “Legion” did not do so and instead purchased other books in competition with “Legion.”   Plaintiff thereby sustained damages in excess of $3 million.   The fifth cause of action, apparently based on the court's comments in sustaining the demurrer to the complaint, alleged that defendant had a public duty or trust to sell and distribute newspapers containing a fair and honest report of all news without bias or prejudice;  defendant's conduct and representations concerning the list constituted a breach of such duty which caused plaintiff to sustain damages of more than $3 million.

Defendant demurred generally to the amended complaint on grounds that each cause of action is barred by the First Amendment to the United States Constitution and article I, section 2 of the California Constitution, and the facts pleaded do not state a cause of action on any of the theories set forth.   The demurrer was sustained without leave to amend on the grounds stated.   Judgment was entered dismissing the action.

DISCUSSION

IAPPEAL FROM JUDGMENT OF DISMISSAL

 Plaintiff contends the original complaint as well as the amended complaint stated valid causes of action.   While an appellate court ordinarily will not consider the allegations of a superseded complaint (see Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 884, 92 Cal.Rptr. 162, 479 P.2d 362), that rule is inapplicable where the trial court denied plaintiff leave to include those allegations in an amended complaint.  (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209, 197 Cal.Rptr. 783, 673 P.2d 660.)   The trial court here sustained the demurrer to the complaint without leave to amend as to all causes of action except intentional interference with prospective business advantage, limiting an amended complaint to that cause of action and any other that could be stated consistent with the court's ruling.   Accordingly, the allegations of the complaint are reviewable insofar as they attempted to state causes of action for negligent interference with prospective business advantage, negligence and trade libel.

 A legal duty to use due care is a necessary element of a negligence action.  (Bigbee v. Pacific Tel. & Tel. Co. (1983) 34 Cal.3d 49, 54, fn. 3, 192 Cal.Rptr. 857, 665 P.2d 947.)   The determination of duty is primarily a question of law;  it is the court's “ ‘expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.’  [Citation.]”  (Weirum v. RKO General, Inc. (1975) 15 Cal.3d 40, 46, 123 Cal.Rptr. 468, 539 P.2d 36.)   In J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804, 157 Cal.Rptr. 407, 598 P.2d 60, the Supreme Court set forth six criteria for determining whether a duty of care is owed:  (1) the extent to which the transaction was intended to affect the plaintiff;  (2) the foreseeability of harm to the plaintiff;  (3) the degree of certainty that the plaintiff suffered injury;  (4) the closeness of the connection between the defendant's conduct and the injury suffered;  (5) the moral blame attached to the defendant's conduct;  and (6) the policy of preventing future harm.   In connection with the last factor, countervailing public policies which may preclude recovery must also be considered.  (Id., at p. 804, fn. 1, 157 Cal.Rptr. 407, 598 P.2d 60.)

 Assuming a sufficiently close connection between defendant's conduct and plaintiff's injury and that the harm to plaintiff was foreseeable, the other factors compel the conclusion that defendant owed no duty to plaintiff to include his book in its best seller list.   The complaint did not specifically allege that the omission of the book from the list was intended to affect plaintiff, and no facts are alleged which show such an intent on defendant's part.   Further, no facts are pleaded from which it may be inferred that defendant's conduct was morally blameworthy.   The complaint alleges that defendant failed to include plaintiff's book in its best seller list despite knowledge that it “sold more than sufficient copies to warrant inclusion and otherwise met all criteria for inclusion.”   The complaint fails to allege how it was determined that enough copies of the book were sold to warrant its inclusion, or what other criteria were met and by whom they were established.   For all that appears defendant, for reasons of its own and employing criteria different from those which plaintiff considered to be conclusive, deemed the book unqualified for inclusion in the list.   Public policy factors also weigh against imposition of such a duty.   The list is a means of informing the public of the relative popularity of current works of fiction and nonfiction.   If defendant were held to owe a duty to plaintiff to include his book in its list, other authors could assert a like duty owed to them.   Faced with such a situation defendant might well cease compilation and publication of the list, thereby depriving the public of a valuable service.   For all of these reasons we conclude as a matter of law that defendant owed plaintiff no duty to include his book in its best seller list.   It follows that the complaint does not state causes of action for either negligent interference with prospective advantage or negligence.

 Trade libel is defined as “an intentional disparagement of the quality of property, which results in pecuniary damage to plaintiff.”   (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73, 36 Cal.Rptr. 256.)  “The distinction between libel and trade libel is that the former concerns the person or reputation of plaintiff and the latter relates to his goods.”   (Shores v. Chip Steak Co. (1955) 130 Cal.App.2d 627, 630, 279 P.2d 595.)   The complaint fails to state a cause of action for trade libel.   Such libel allegedly consisted of defendant's intentional and false omission of “Legion” from its best seller list.   Silence is not libel.  (Pond v. General Electric Co. (9th Cir.1958) 256 F.2d 824, 827, cert. den., 358 U.S. 818, 3 L.Ed.3d 60, 79 S.Ct. 30.)  “[T]he law does not recognize libel by omission as a tort.   Libel, by definition, consists of the publication of a false and unprivileged fact.   Thus, liability may be imposed in a libel case only for an assertion or implication of fact that is false and unprivileged, and not for mere omission of a relevant fact.”  (Janklow v. Newsweek, Inc. (8th Cir.1985) 759 F.2d 644, 648;  fn. omitted.)   Of particular significance in the present case is the Janklow court's further conclusion that refusal to impose liability for omission of facts “has strong underpinnings in the First Amendment.”  (759 F.2d at p. 648.)   Said the court:  “In Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974), the Supreme Court struck down a state law that made punishable as a misdemeanor a newspaper's failure to print the reply of a political candidate to a column by that newspaper attacking the candidate's official record.  ․ While newspapers have long been liable for that which they publish, they have never been liable solely for that which was omitted.  [Citation.]  We see no constitutionally significant distinction between the law struck down in Miami Herald, which made it a misdemeanor not to publish a specific item, and a cause of action that would permit a plaintiff to recover damages based on mere failure to publish a specific item.”  (Janklow v. Newsweek, Inc., supra, 759 F.2d at p. 648.)

 Plaintiff contends the trial court erred in ordering depositions for the purpose of ruling on the demurrer to the complaint and in taking judicial notice of the depositions in sustaining the demurrer (see De Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 219 Cal.Rptr. 661).   He also complains of the court's refusal to allow him to conduct discovery for that purpose beyond the limited scope ordered by the court.   It is unnecessary to consider the merits of these contentions inasmuch as the action of the court in sustaining the demurrer was correct.  “ ‘․ No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason.   If right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion.’  [Citation.]”  (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19, 112 Cal.Rptr. 786, 520 P.2d 10.)

We turn now to the amended complaint.   Defendant argues no cause of action is stated under the unfair competition and false advertising laws (Bus. & Prof. Code, § 17200 et seq., § 17500 et seq.) because the remedy for violation of such laws does not include damages for private individuals, but is limited to injunctive relief (id., §§ 17203, 17535) and imposition of civil penalties (id., §§ 17206, 17207, 17535.5, 17536).   In United Farm Workers of America v. Superior Court (1975) 47 Cal.App.3d 334, 343–345, 120 Cal.Rptr. 904, it was held that damages are recoverable by an individual plaintiff for violation of the unfair competition law.   The court there reasoned:  “[T]he breach of a duty imposed by statute gives rise to a cause of action for damages if damages can be shown.   The fact that the statutes sound in equity and by their terms do not specify that damages may be awarded does not bar the recovery of damages in a proper case even though the action be one in equity rather than law.”   (United Farm Workers, supra, 47 Cal.App.3d at p. 344, 120 Cal.Rptr. 904.)   However, in Chern v. Bank of America (1976) 15 Cal.3d 866, 127 Cal.Rptr. 110, 544 P.2d 1310, the Supreme Court stated:  “Plaintiff's cause of action to recover damages for false or misleading statements (Bus. & Prof. Code, § 17500) was likewise properly dismissed.   The applicable statutes do not authorize recovery of damages by private individuals.   Private relief is limited to filing of actions for an injunction (id., § 17535);  and civil penalties are recoverable only by specified public officers (id., §§ 17535.5, 17536.)”  (P. 875;  original emphasis.)

 Both parties rely on Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d 197, 197 Cal.Rptr. 783, 673 P.2d 660, in support of their respective positions on the issue whether a plaintiff other than a business competitor can recover damages on a cause of action based on the unfair competition or false advertising law.   Such reliance is misplaced, for the Supreme Court in that case deemed it unnecessary to reach the issue and thus did not resolve the conflict between United Farm Workers and Chern;  the court merely referred to both cases for a discussion of the damage issue.   (35 Cal.3d at p. 215, fn. 16, 197 Cal.Rptr. 783, 673 P.2d 660.)   Inasmuch as Chern is a decision of the Supreme Court, we are bound to follow it.   (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.)   We therefore conclude that the amended complaint does not state causes of action for damages sustained by plaintiff as a private individual based on defendant's alleged violation of the unfair competition and false advertising laws.

 As previously noted, it appears that the cause of action labeled “breach of public duty and trust to report the news fairly and honestly without bias or prejudice” was included in the amended complaint in response to the trial court's comments in sustaining the demurrer to the complaint.   That the First Amendment prohibits imposition of such a duty is made clear by the United States Supreme Court.  “For better or worse, editing is what editors are for;  and editing is selection and choice of material.   That editors—newspaper or broadcast—can and do abuse this power is beyond doubt․  Calculated risks of abuse are taken in order to preserve higher values.   The presence of these risks is nothing new;  the authors of the Bill of Rights accepted the reality that these risks were evils for which there was no acceptable remedy other than a spirit of moderation and a sense of responsibility—and civility—on the part of those who exercise the guaranteed freedoms of expression.”   (Columbia Broadcasting v. Democratic Comm. (1973) 412 U.S. 94, 124–125, 93 S.Ct. 2080, 2097, 36 L.Ed.3d 772, 796.)   The principle was stated even more forcefully in Miami Herald Publishing Co. v. Tornillo (1974) 418 U.S. 241, 258, 94 S.Ct. 2831, 2840, 41 L.Ed. [41 L.Ed.2d 730, 741, 94 S.Ct. 2831] ):  “The choice of material to go into a newspaper, and the decisions made as to limitations on the size and content of the paper, and treatment of public issues and public officials—whether fair or unfair—constitute the exercise of editorial control and judgment.   It has yet to be demonstrated how governmental regulation of this crucial process can be exercised consistent with First Amendment guarantees of a free press as they have evolved to this time.”  (Emphasis added.)

The elements of a cause of action for intentional interference with prospective economic advantage are:  (1) an economic relationship between the plaintiff and some third person containing the probability of future economic benefit to the plaintiff;  (2) knowledge by the defendant of the existence of the relationship;  (3) intentional acts on the part of the defendant designed to disrupt the relationship;  (4) actual disruption thereof;  and (5) damages to plaintiff proximately caused by the act of the defendant.  (Buckaloo v. Johnson (1975) 14 Cal.3d 815, 827, 122 Cal.Rptr. 745, 537 P.2d 865;  Smith v. Superior Court (1984) 151 Cal.App.3d 491, 501, 198 Cal.Rptr. 829;  Asia Investment Co. v. Borowski (1982) 133 Cal.App.3d 832, 840–841, 184 Cal.Rptr. 317.)   The amended complaint sets forth each of these elements.   It alleges that plaintiff, as author of the novel “Legion,” owns valuable rights in the book and in revenues from its sale.   Many persons purchase current novels, and many book sellers promote current novels, primarily because such novels are included in defendant's best seller list;  many book stores discount books appearing in the list and display such books more prominently than those not on the list.   Thus, books included in the list sell substantially more copies than those not appearing therein.   Defendant knew the list had and has such influence.   Because of this influence, authors whose books appear on the list have a “significant and valuable prospective business advantage” in promoting and maximizing sales of their books.   Defendant expressly and impliedly represented to authors, book sellers and the general public that the list was an objective, unbiased and accurate compilation of actual sales of books each week by 2,000 book stores in every region of the United States.   At the time it made such representations defendant knew they were untrue.   With knowledge that the list had substantial influence on book sellers and the general public and that plaintiff would be deprived of the prospective advantage by omission of his book from the list, defendant “intentionally or recklessly and without cause” refused to include the book in the list.   Defendant acted with the intent and purpose of depriving plaintiff of his rights and property.   As a direct and proximate result of defendant's acts, plaintiff suffered damages.

 Defendant argues that the foregoing allegations do not include the first and second elements of a cause of action for intentional interference with prospective economic advantage because there is no showing that plaintiff had an existing economic relationship with any specific third person, but only a showing of possible future relationship with potential purchasers of his book;  the allegation that defendant knew of the list's influence on such purchasers is not tantamount to an allegation that defendant knew of an existing relationship subject to intentional interference.   The contention lacks merit.   The tort of interference with prospective advantage lies for interference with relations which are merely prospective or potential.   (See Buckaloo v. Johnson, supra, 14 Cal.3d 815, 822, 122 Cal.Rptr. 745, 537 P.2d 865;  Smith v. Superior Court, supra, 151 Cal.App.3d 491, 501–502, 198 Cal.Rptr. 829;  Gold v. Los Angeles Democratic League (1975) 49 Cal.App.3d 365, 375, 122 Cal.Rptr. 732.)   Liberally construed with a view to substantive justice between the parties (see Postley v. Harvey (1984) 153 Cal.App.3d 280, 287, 200 Cal.Rptr. 354), the amended complaint alleges the requisite relationship and defendant's knowledge of the existence of that relationship.

Defendant also contends the cause of action for intentional interference with prospective advantage is fatally defective because defendant owed plaintiff no duty to protect his economic interest.   In support of this contention defendant cites Worldvision Enterprises, Inc. v. American Broadcasting Companies, Inc. (1983) 142 Cal.App.3d 589, 191 Cal.Rptr. 148.   That case is not in point inasmuch as it involved an action for negligent interference with prospective economic advantage.

 Defendant further argues that inasmuch as the list was compiled in the exercise of its editorial judgment and represented its opinion of which books were best sellers, the First Amendment shields defendant from liability for interference with plaintiff's prospective advantage by refusing to include his book in the list.  (See Miami Herald Publishing Co. v. Tornillo, supra, 481 U.S. 241, 258, 94 S.Ct. 2831, 2839, 41 L.Ed.2d 730, 741;  Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 339–340, 94 S.Ct. 2297, 41 L.Ed.2d 789, 805.)   This contention ignores the amended complaint's allegation that defendant falsely represented, with knowledge of falsity, that the list was an accurate and objective compilation of actual sales of books each week in 2,000 book stores throughout the United States.   The list thus was not held out as the product of defendant's editorial judgment or an expression of its opinion, but was falsely represented to be in fact a compilation of best sellers based on objective criteria.   Under these circumstances the First Amendment does not foreclose plaintiff's cause of action.  “[T]here is no constitutional value in false statements of fact.   Neither the intentional lie nor the careless error materially advances society's interest in ‘uninhibited, robust, wide-open’ debate on public issues.  [Citation.]  They belong to that category of utterances which ‘are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality.’  [Citation.]”  (Gertz v. Robert Welch, Inc., supra, 418 U.S. at p. 340, 94 S.Ct. at p. 2302, 41 L.Ed.2d at p. 805.)

We conclude that the judgment of dismissal must be reversed as to the causes of action for intentional interference with prospective economic advantage.

II

APPEAL FROM ORDER DENYING MOTION TO TAX COSTS

 Inasmuch as the award of costs to defendant was incident to the judgment, partial reversal of the judgment operates to vacate the award.  (See 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 625, p. 607.)   Accordingly, plaintiff's appeal from order denying his motion to tax costs is moot, and the appeal therefrom is dismissed.

DISPOSITION

The judgment of dismissal is reversed as to the first and second causes of actions with directions to the trial court to overrule the demurrer to those causes of action and allow defendant a reasonable time within which to file an answer thereto;  in all other respects the judgment is affirmed.   Plaintiff's appeal from order denying his motion to tax costs is dismissed.   Neither party shall recover costs on appeal.

FOOTNOTES

1.   The order is appealable.  (Code Civ.Proc., § 904.1, subd. (b);  Lacey v. Bertone (1949) 33 Cal.2d 649, 654, 203 P.2d 755;  Jimenez v. City of Oxnard (1982) 134 Cal.App.3d 856, 858, fn. 3, 184 Cal.Rptr. 864.)

2.   The court clarified its ruling as follows:  “․ 2. As to the second cause of action, if the new facts to be alleged also are sufficient to support other causes of action, the complaint may so allege.  [¶] 3. The court is limiting the plaintiff to a cause of action for an intentional omission of Legion from the ‘Best Seller List’ by the New York Times despite its knowledge that the sales of the book to the public qualified it for inclusion on the list.”  (Original emphasis.)

3.   The second cause of action differs from the first only by the addition of allegations that defendant republished the best seller list separate and apart from its publication in the New York Times and the New York Times Book review, and promoted, sold, syndicated and licensed the list throughout the world as a service to vendors and other persons;  defendant also furnished to book stores and book sellers “blow-ups” of the list for public display.Plaintiff states that the purpose of such allegations is to focus on defendant's commercial activities in advertising and marketing the list.

LILLIE, Presiding Justice.

THOMPSON and JOHNSON, JJ., concur.