United States Court of Appeals
For the First Circuit
No. 01-1643
ROBERT HOWARD,
Plaintiff, Appellee,
v.
SUSAN ANTILLA,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges,
and Saris,* District Judge.
Jonathan M. Albano, with whom Bingham Dana LLP, William L.
Chapman and Orr & Reno were on brief, for appellant.
Robert A. Bertsche, Zick Rubin, Stuart Svonkin and Hill &
Barlow were on brief, for amici curiae in support of appellant.
Charles G. Douglas, III, with whom C. Kevin Leonard, V.
Richards Ward, Jr. and Douglas, Leonard & Garvey, P.C. were on
brief, for appellee.
June 28, 2002
*
Of the District of Massachusetts, sitting by designation.
TORRUELLA, Circuit Judge. The plaintiff, chairman of a
publicly-traded company, brought suit against the defendant, a
newspaper reporter, for defamation and false light invasion of
privacy. At the end of the trial, the jury returned a sizeable
verdict in favor of the plaintiff on his claim for false light
invasion of privacy, but a take-nothing verdict on the defamation
claim. For the reasons stated below, we vacate the jury's verdict
on the false light claim and order an entry of judgment in favor of
the defendant.
I.
Defendant-appellant Susan Antilla ("Antilla") was a
business reporter for The New York Times ("The Times"), where her
writing focused mostly on explaining the financial world to the
average investor. At the time of the events in this case, Antilla
had approximately 18 years of experience reporting on business news
for a variety of publications. Her experience included stints as
a reporter at Dunn's Review, as a stock market reporter at USA
Today, and as the financial news bureau chief in New York for the
Baltimore Sun. Antilla was also an adjunct professor at New York
University, teaching business journalism in the graduate journalism
department.
In the fall of 1994, Antilla learned of a rumor
circulating on Wall Street concerning plaintiff-appellee Robert
Howard ("Howard"), who was then the chairman of two publicly-traded
companies, Presstek, Inc. and Howtek, Inc. The substance of the
rumor was that Howard was in fact Howard Finkelstein
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("Finkelstein"), a convicted felon. Finkelstein, who had been
known to use the name Robert Howard as an alias, had prior
convictions for securities fraud, violation of the White Slave Act,
conspiracy to defraud, and interstate transportation of stolen
property.
Antilla learned of the rumor from confidential sources
whom she knew to be "short sellers" of Presstek stock. "Short
selling" is a transaction in which an investor borrows shares of
stock, sells them, and later buys an equivalent amount of shares to
return the borrowed shares. The potential for profit in short
selling lies in the possibility that the stock price will decline
between the time the short seller sells the borrowed stock and the
time he must purchase replacement shares to repay the borrowed
stock.
Antilla perceived a newsworthy correlation between the
circulation of the short sellers' "dual identity" rumor and recent
fluctuations in the price of Presstek stock. In order to generate
a story on the topic, she investigated the rumor for over a month,
interviewing roughly thirty people including Howard himself,
Howard's son, and officials from the Securities and Exchange
Commission ("SEC").
The article was published on October 27, 1994. Headlined
"Is Howard Really Finkelstein? Money Rides on It," the article
begins with the question "Is Robert Howard really Howard
Finkelstein? A lot of investors in Mr. Howard's Presstek Inc.
would like to know. But not even the Securities and Exchange
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Commission can say for sure. And the lingering mystery has roiled
a hot stock and left the S.E.C. blushing."1
A significant portion of the article details Antilla's
efforts to obtain confirmation of the rumor's truth or falsity from
the SEC. None of the three SEC officials with whom she spoke could
definitively resolve the short sellers' rumor, in part because the
agency had failed to input aliases into its computer record-keeping
system. However, one SEC official stated that the SEC's "records
don't indicate that [Howard] is anyone [other than who he claims to
be]."
The article goes on to report that Howard had
unequivocally denied the rumor and, further, that Howard's son,
Dr. Lawrence Howard, had supplied "extensive documents" to show
both his father's addresses at various times and that Howard and
Finkelstein had different birth dates. However, the article also
casts doubt on Dr. Howard's effort's to clear his father's name by
noting his "reluctance . . . to be forthcoming about several
questions." In particular, the article recounts that, when asked
to supply names of his father's children and stepchildren,
Dr. Howard "would entertain the question only if first supplied
with the names of Mr. Finkelstein's children and stepchildren."
The article also states that Dr. Howard had declined to provide a
full copy of testimony his father had given in a proceeding before
the SEC earlier that year.
1
The full text of the article is set forth in the appendix to
this opinion.
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At the same time, the article also casts doubt on the
credibility of short sellers who were pushing the rumor and who
stood to profit from a decline in Presstek stock. For example, a
separate side bar (under the headline "Wall St. Story: Jumbled
Fact") detailed false information that the short sellers had
provided to Antilla, including an erroneous report that Howard had
earlier admitted to going by the name Finkelstein and a bogus tip
that directory assistance gave the same telephone number for both
Robert Howard and Howard Finkelstein.2
On the day of publication, lawyers for Howard met with
senior management for The Times as well as Antilla. During that
meeting Howard's representatives provided additional information,
including passports not previously shown to Antilla, that
corroborated Howard's denial of the rumor. Howard's
representatives also disclosed that Howard would be returning to
the United States from France to be fingerprinted by the SEC in
order to conclusively refute the rumor.
That same day, Antilla received a phone call from Fred
Newman ("Newman"), a lawyer who previously had represented
Finkelstein. Before the article's publication, Antilla had tried
to reach Newman unsuccessfully to obtain independent confirmation
of the truth or falsity of the rumor.3 Newman had not returned
2
The full text of the side bar is also set forth in the appendix
attached to this opinion.
3
Antilla's article recounted the story of another lawyer who had
represented Finkelstein. When supplied with a photograph of
Howard, the lawyer said that, although he "couldn't swear to it,"
he thought the photograph depicted his former client. Yet another
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Antilla's calls, but after reading the article he telephoned her to
say that, based upon the picture of Howard in The Times, the men
were not the same person.
Based upon the information provided by Howard's
representatives during the October 27 meeting, Howard's willingness
to be fingerprinted, and the information received from attorney
Newman, The Times published a correction and a front page business
section article on October 28, 1994, stating that it had found "no
credible evidence" to support the rumor and expressing regret that
the rumor had been published.4
The SEC continued to take no public position on the truth
of the rumor until November 1, 1994, when, on the basis of a
fingerprint analysis conducted by the FBI, the SEC formally
announced that Howard is not Finkelstein.
Almost three years later Howard filed the present action,
naming Antilla, but not The Times, as a defendant. Howard's
complaint contained counts for negligent defamation, libel, and
false light invasion of privacy. After determining at the summary
judgment phase that Howard is a limited public figure, the district
court pared Howard's claims down to defamation and false light, and
the case proceeded to trial.
lawyer who had previously represented Finkelstein was reported in
the article as being unable to recall what his former client looked
like.
4
The full text of the correction is also set forth in the
appendix attached to this opinion.
-6-
At the end of the trial the jury returned a verdict in
favor of Antilla on the defamation claim, but found in favor of
Howard on the false light claim. The jury awarded Howard $480,000
in compensatory damages and nothing for "enhanced compensatory
damages."5 Despite the seeming inconsistency in the jury's
verdict, Antilla made no objection prior to the discharge of the
jury.6 Instead, after the jury's discharge, she moved for judgment
as a matter of law or, in the alternative, for a new trial or
remitittur. The district court denied the motion, Howard v.
Antilla, 160 F. Supp. 2d 169 (D.N.H. 2001), and Antilla's appeal of
the false light verdict followed.
II.
A.
It is rare that the pedigree of a whole breed of common
law tort claims can be traced with pinpoint accuracy. But in the
case of common law claims for invasion of the right of privacy,
most sources agree that the broad contours of these legal theories
were first outlined by Samuel Warren and Louis Brandeis in the
pages of the Harvard Law Review. See Samuel D. Warren & Louis D.
Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890); see
also Harry Kalven, Jr., Privacy in Tort Law -- Were Warren and
5
The parties stipulated at trial that Howard's damages were
limited to the 66 days that followed the publication of the
article.
6
Nor did Antilla object to the use of a verdict form that would
allow the jury find in favor of one party on the defamation claim,
yet find in favor of the other party on false light.
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Brandeis Wrong?, 31 Law & Contemp. Probs. 326, 327 (1966) (hailing
Warren and Brandeis's article as the "most influential law review
article of all"). Warren and Brandeis called generally for the
recognition of an individual's legal right to control dissemination
of information about himself when that information relates to
nonpublic aspects of his life. See Warren & Brandeis, supra, at
214-16.
Later, as Warren and Brandeis's theories took root, Dean
William Prosser distilled the amorphous legal protection of privacy
into four distinct causes of action: (1) intrusion upon solitude;
(2) public disclosure of embarrassing facts; (3) appropriation of
an individual's name or likeness; and (4) publicly casting a person
in a false light. See William Prosser, Privacy, 48 Cal. L. Rev.
383, 389 (1960). Dean Prosser's conception of the tort of false
light invasion of privacy was ultimately accepted by the American
Law Institute and set forth in the Restatement (Second) of Torts
(1977) as follows:
One who gives publicity to a matter concerning
another that places the other before the
public in a false light is subject to
liability to the other for invasion of his
privacy, if
(a) the false light in which the other was
placed would be highly offensive to a
reasonable person, and
(b) the actor had knowledge of or acted in
reckless disregard as to the falsity of the
publicized matter and the false light in which
the other would be placed.
Id. § 652E.
The Restatement's formulation of false light has enjoyed
a wide degree of acceptance. See, e.g., West v. Media Gen.
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Convergence, Inc., 53 S.W.3d 640, 644 (Tenn. 2001) (adopting
Restatement (Second) of Torts § 652E and collecting cases from
other jurisdictions that have done so). However, a number of
jurisdictions have declined to recognize a common law cause of
action for false light invasion of privacy, see id. at 644-45
(collecting cases), and scholarly critique of the tort has at times
been sharp. See Diane L. Zimmerman, False Light Invasion of
Privacy: The Light That Failed, 64 N.Y.U. L. Rev. 364, 435-51
(1989) (arguing that false light claims have an unwarranted
chilling effect on free speech); J. Clark Kelso, False Light
Privacy: A Requiem, 32 Santa Clara L. Rev. 783, 785 (1992)
(claiming that "that there is not even a single good case in which
false light can be clearly identified as adding anything
distinctive to the law"). The New Hampshire Supreme Court has
never explicitly recognized the viability of a claim for false
light. For the purposes of this appeal, however, we accept the
agreement of the parties, followed by the district court, that a
common law claim for false light invasion of privacy can be
sustained under the law of New Hampshire. Cf. Hamberger v.
Eastman, 206 A.2d 239, 240-41 (N.H. 1964) (discussing favorably
Dean Prosser's four categories of privacy-oriented tort claims).
We pause, however, to note some important constitutional
considerations that must inform our analysis in this case.
B.
Where a false light invasion of privacy action involves
a public figure plaintiff and a media defendant, the federal
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constitution imposes the same requirements that would apply to an
analogous claim for defamation under New York Times Co. v.
Sullivan, 376 U.S. 254 (1964), and its progeny.7 See Time, Inc. v.
Hill, 385 U.S. 374, 390-91 (1967); Veilleux v. Nat'l Broad. Co.,
206 F.3d 92, 134 (1st Cir. 2000). Thus, only statements that are
"provable as false" are actionable. Milkovich v. Lorain Journal
Co., 497 U.S. 1, 19-20 (1990); Veilleux, 206 F.3d at 108. The
plaintiff must also shoulder the burden of proving the falsity of
each statement. Philadelphia Newspapers, Inc. v. Hepps, 475 U.S.
767, 776 (1986). Moreover, the plaintiff must prove that the
offending statement was made with "actual malice" -- that is, that
the false statement was made intentionally or with reckless
disregard as to whether it was false -- and proof of that element
must be established by the quantum of "convincing clarity."
Sullivan, 376 U.S. at 285-86.
The First Amendment concerns at stake in this case also
engender a heightened level of scrutiny of the jury's verdict on
appeal. See Veilleux, 206 F.3d at 106. In the ordinary case, we
would review the evidence in the light most favorable to the
prevailing plaintiff to determine if the evidence permits a
reasonable jury to find in favor of the plaintiff on any
permissible theory. See McMillan v. Mass. Soc'y for the Prevention
of Cruelty to Animals, 140 F.3d 288, 299 (1st Cir. 1998). However,
in cases raising First Amendment considerations, this court must
7
Howard does not challenge on appeal the district court's
conclusion that he qualifies as a limited public figure.
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conduct an "independent review of the evidence on the dispositive
constitutional issue[s]." Bose Corp. v. Consumers Union, 466 U.S.
485, 508 (1984). Thus, "where the trial court is called upon to
resolve a number of mixed fact/law matters which implicate core
First Amendment concerns, our review, at least on these matters,
is plenary . . . ." AIDS Action Comm. v. Mass. Bay Transp. Auth.,
42 F.3d 1, 7 (1st Cir. 1994). Plenary review also extends, as it
does in the ordinary case, to pure questions of law.8 Daggett v.
Comm'n on Governmental Ethics & Election Practices, 205 F.3d 445,
466 (1st Cir. 2000).
With these lessons in mind, we turn to Antilla's attack
on the jury's false light verdict.
III.
Antilla raises several arguments on appeal as to why the
jury's false light verdict must be vacated or reversed. She argues
first that the theory supporting the false light claim, as
articulated by the district court, is constitutionally infirm.
Second, she contends that Howard failed to adduce evidence
sufficient to support the jury's finding of actual malice. Lastly,
Antilla argues that the jury's award of damages was excessive and
unsupported by the evidence.
8
To be sure, independent review is subject to limitations and is
not equivalent to de novo review of the entire record. For
instance, "[p]urely factual determinations, particularly those
involving the credibility of witnesses, remain best addressed by
the factfinder, and are subject to the usual, more deferential
standard of review." Veilleux, 206 F.3d at 107.
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A.
In her post-trial motions, Antilla complained that the
jury's false light verdict must be disregarded because, inter alia,
it was inconsistent with the jury's rejection of Howard's
defamation claim. The district court undertook to salvage the
jury's finding in favor of the plaintiff on the false light claim
as follows:
The evidence fully supported the jury's
conclusion that, while defendant might not
have defamed Howard (i.e., implied that he was
Finkelstein, an unsavory felon convicted of
securities violations), she nevertheless did
present him in an actionable false light
(i.e., implied that he could be Finkelstein
and that some facts tended to support that
proposition). . . .
. . . .
Fairly considered, the evidence more than
adequately supports a conclusion that, while
the article might not convey the impression
that Howard is Finkelstein (defendant says her
article remained "'agnostic' about the truth
of the rumor"), it certainly leaves the reader
with the unmistakable impression that Howard
could be Finkelstein -- that the "rumor" poses
an open and reasonably debatable proposition .
. . . [T]he article plainly implies that
whether Howard is, in reality, Finkelstein is
a reasonable, and as yet unresolved, question
-- a factual mystery worth pondering.
Howard, 160 F. Supp. 2d at 174-75 (emphases in original).
Antilla now argues on appeal that the district court's
theory of false light liability -- that the plaintiff may recover
based on the article's false implication that Howard "might be"
Finkelstein -- is constitutionally infirm because it entails no
factual assertion that is "provable as false." Milkovich, 497 U.S.
at 19-20; Veilleux, 206 F.3d at 108. As a prudential matter,
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however, we think it unwise to entertain Antilla's challenge on
these grounds. Two principle factors lead us to this conclusion.
First, Antilla failed to raise her objection to the
seemingly inconsistent verdict before the discharge of the jury.
Under our precedent, it is well established that she thereby
forfeited any right to challenge the inconsistency by way of a
subsequent motion for new trial or motion for judgment as a matter
of law. See Campos-Orrego v. Rivera, 175 F.3d 89, 97-98 (1st Cir.
1999); Toucet v. Mar. Overseas Corp., 991 F.2d 5, 8 (1st Cir.
1993); Austin v. Lincoln Equip. Assocs., Inc., 888 F.2d 934, 939
(1st Cir. 1989); McIsaac v. Didriksen Fishing Corp., 809 F.2d 129,
134 (1st Cir. 1987); Merchant v. Ruhle, 740 F.2d 86, 91 (1st Cir.
1984); Fernández v. Chardón, 681 F.2d 42, 58 (1st Cir. 1982);
Skillin v. Kimball, 643 F.2d 19, 20 (1st Cir. 1981). This rule of
forfeiture makes eminent sense:
[T]he only efficient time to cure these
possible problems of inconsistency would be
after the jury announced the results of its
deliberations and before it was excused
. . . . To allow a new trial after the
objecting party failed to seek a proper remedy
at the only possible time would undermine the
incentives for efficient trial procedure and
would allow the possible misuse of [the
Federal Rules of Civil Procedure] . . . to
implant a ground for appeal should the jury's
opinion prove distasteful . . . .
Skillin, 643 F.2d at 19-20. The inconsistency Antilla assailed in
her post-trial motions should not have been a surprise.
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Given the close (and frequently noted) similarity between
claims of defamation and false light,9 Antilla "should have
observed that there could be no 'either-or.'" Merchant, 740 F.2d
at 91. Since Antilla forfeited her opportunity to draw attention
to, and perhaps cure, the inconsistency in a timely fashion, the
district court's attempt to reconcile the jury's findings was
essentially gratuitous. And we are not in the business of
rendering opinions on hypothetical controversies, particularly ones
of constitutional import.10 See Maher v. Hyde, 272 F.3d 83, 86 (1st
Cir. 2001) ("Federal courts do not issue advisory opinions.").
Second, in entertaining Antilla's challenge to the
consistency of the verdict, the district court entered judgment on
an entirely novel and untried theory of liability. "[A] defendant
must be afforded both adequate notice of any claims asserted
9
Generally understood, a "false light privacy action differs from
a defamation action in that the injury in privacy actions is mental
distress from having been exposed to public view, while the injury
in defamation actions is damage to reputation." Rinsley v. Brandt,
700 F.2d 1304, 1307 (10th Cir. 1983); accord Robert D. Sack, Libel,
Slander, and Related Problems § 10.3, at 561-62 (2d ed. 1994);
Bruce W. Sanford, Libel and Privacy § 11.4.4, at 579 (2d ed. Supp.
1999); William Prosser & Robert E. Keeton, Prosser and Keeton on
Torts § 117, at 864 (5th ed. 1984). We have recognized other, less
fundamental, distinctions as well. See Veilleux, 206 F.3d at 134-
35 (noting that false light does not distinguish between oral and
written words or between slander per se and slander per quod, and
that false light contains an expanded publicity requirement).
10
To the extent Antilla's forfeited claim of inconsistency might
still be reviewed for "plain error," see Smith v. KMart Corp., 177
F.3d 19, 28-29 (1st Cir. 1999), we find that the circumstances
presented by this case are a far cry from satisfying that miserly
standard. See Merchant, 740 F.2d at 89-90 (reasoning that "a
number considerations" point to some tolerance of inconsistency in
civil verdicts); cf. Davis v. Rennie, 264 F.3d 86, 100-01 (1st Cir.
2001) (noting that no known decision of this circuit has found
plain error in a civil case).
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against him and a meaningful opportunity to mount a defense."
Rodríguez v. Doral Mortgage Co., 57 F.3d 1168, 1172 (1st Cir.
1995). To that end, "a district court may not enter judgment for
a plaintiff on a cause of action that was . . . [not] raised during
the course of trial." Id. at 1173. This principle has even
stronger force in the context of a case involving significant First
Amendment issues, given our obligation to ensure that "the judgment
does not constitute a forbidden intrusion on the field of free
expression." Bose Corp., 466 U.S. at 499 (quoting Sullivan, 376
U.S. at 285). In this case, the entire trial -- including the
initial jury instructions, the opening statements, the parties'
presentation of evidence and questioning of witnesses, the closing
arguments, and the final jury instructions -- was predicated on the
same theory of the case: that Antilla is liable for false light
invasion of privacy because her article falsely implied that Howard
is Finkelstein.11 To enter judgment after the close of trial on an
11
The only suggestion that the false light claim could be premised
on the implication that Howard might be Finkelstein can be found in
the general allegations of Howard's amended complaint. Therein,
Howard alleges the following: "The story meant and intended to
convey that substantial questions are raised as to whether
Presstek's chairman was in fact a convicted felon . . . thus
creating a clear impression that money rides on the question which
Antilla is unable to answer in Howard's favor." (emphasis added).
However, the more specific allegations in Howard's complaint tend
to characterize his false light claim as riding on the article's
implication that Howard is Finkelstein. In particular, Howard
alleged that the article "created a false implication that [Howard]
and his company were to be avoided because of his sordid and
disgusting past," and that the article "depicted [Howard] as
someone or something which he is not." More importantly, even if
the complaint flagged a theory of liability based on the
implication that Howard might be Finkelstein at the earlier stages
of litigation, the plaintiff simply failed to carry the theory
through to trial.
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imaginative but untried theory (viz., that the article falsely
implied that Howard "might be" Finkelstein) would run counter to
important consideration of due process.
Since we conclude that a theory of false light recovery
based on the article's implication that Howard "might be"
Finkelstein is not properly before us, we decline to address its
constitutional viability. We will therefore proceed to analyze
Antilla's remaining arguments in the context of the false light
theory that was actually presented to the jury -- namely, that
Antilla's article falsely implied that Howard is Finkelstein and
thereby placed him in highly offensive false light. We turn to
those issues now.
B.
As noted earlier, the First Amendment requires that a
false light plaintiff who qualifies as a public figure must prove
by clear and convincing evidence that the offending false statement
was made with "actual malice." Antilla argues that, as a matter of
law, Howard's evidence at trial fell shy of this mark.
"The standard of actual malice is a daunting one."
McFarlane v. Esquire Magazine, 74 F.3d 1296, 1308 (D.C. Cir. 1996).
The plaintiff cannot succeed merely by demonstrating "an extreme
departure from professional standards." Harte-Hanks
Communications, Inc. v. Connaughton, 491 U.S. 657, 665 (1989).
Instead, "[t]here must be sufficient evidence to permit the
conclusion that the defendant in fact entertained serious doubts as
to the truth of his publication," St. Amant v. Thompson, 390 U.S.
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727, 731 (1968), or acted with a "high degree of awareness of
. . . probable falsity." Garrison v. Louisiana, 379 U.S. 64, 74
(1964). The actual malice test thus mandates a subjective inquiry.
See Connaughton, 491 U.S. at 687. And in a case such as this,
where the plaintiff is claiming injury from an allegedly harmful
implication arising from the defendant's article, "he must show
with clear and convincing evidence that the defendant[] intended or
knew of the implications that the plaintiff is attempting to draw
. . . ." Saenz v. Playboy Enters., Inc., 841 F.2d 1309, 1318 (7th
Cir. 1988); see also Robert D. Sack, Libel, Slander, and Related
Problems § 5.5.1, at 5-64 (3d ed. 1999) ("[I]mplications perceived
in a statement but not intended by the speaker cannot be actionable
in public official or public figure cases."). As noted above, we
are obliged to make a searching, independent review of the evidence
supporting the jury's finding of actual malice. Bose Corp., 466
U.S. at 508; Veilleux, 206 F.3d at 106.
Turning to the article at the center of this dispute, we
think it is questionable, even doubtful, that the article is
actually capable of bearing the harmful implication charged by
Howard -- namely, that he is Finkelstein. To be sure, the article
repeats the short sellers' rumor that Howard is Finkelstein and
proceeds to cast doubt on some of Howard's attempts to dispel the
rumor. But read as a whole, the article points out flaws in both
sides of the story and never places the author in a position of
evaluating the truth or falsity of any party's account. In
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Antilla's words, the article remained "agnostic" with respect to
the truth of the short sellers' rumor.12
The evidence presented to the jury reveals that the
"agnostic" tenor of the article was not accidental. As Antilla
testified, her intent in writing the article was "to be clear that
[she] didn't know the answer" to the question of Howard's true
identity. During the editing process, Antilla's editors emphasized
that the article must be clear that it takes no stand on the truth
or falsity of the rumor and that the article should focus on the
SEC's inability to resolve the rumor despite its role in policing
the market.
There is no dispute that Antilla included certain facts
tending to support the short sellers' story: Howard Finkelstein was
a convicted felon who had, in fact, used the alias "Robert Howard,"
12
Although we decide this case on actual malice grounds, we think
it is important to note that the article might also be
nonactionable for the reasons set out in our recent decision in
Riley v. Harr, No. 01-1648, slip op. at 8-12 (1st Cir. June 11,
2002), even if it could reasonably be read to constitute an implied
assertion that Howard is Finkelstein. To the extent that Antilla
offers a balanced account of the Howard/Finkelstein controversy --
reporting evidence consistent with the hypothesis that Howard is
Finkelstein but also evidence tending to negate that hypothesis --
and does not imply that she is in possession of undisclosed facts
indicating that Howard is Finkelstein, the article would probably
qualify as protected expression under the First Amendment even if
it did not remain agnostic as to Howard's true identity. See id.
at 8-9 (a statement is nonactionable if "'it is plain that the
speaker is expressing a subjective view, an interpretation, a
theory, conjecture, or surmise, rather than claiming to be in
possession of objectively verifiable facts . . . ." (quoting Gray
v. St. Martin's Press, Inc., 221 F.3d 243, 248 (1st Cir. 2000));
Phantom Touring, Inc. v. Affiliated Publications, 953 F.2d 724, 729
(1st Cir. 1992) (a statement is nonactionable if "[t]he sum effect
of the format, tone and entire content of the article[] is to make
it unmistakably clear that [the author] was expressing a point of
view only").
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see United States v. Finkelstein, 526 F.2d 517 (2d Cir. 1975); the
SEC was unable to confirm or deny the rumor; Dr. Howard's son was
reluctant to provide Antilla with certain information; and
Finkelstein's former lawyer stated that he thought a photo of
Howard depicted his former client. Yet countervailing facts were
also included. At Antilla's insistence the editors retained the
sidebar that discredited some of the supposed proof short sellers
had offered in support of their rumor. The article also makes
explicit that the story concerning Howard was indeed a "rumor," and
it discloses that short sellers have a keen interest in pushing the
rumor "regardless of whether it is true" in order to drive the
price of Presstek stock downward. Finally, the article discusses
some of the documentation provided by Dr. Howard that showed that
his father's date of birth differed from that of Finkelstein.
A somewhat analogous situation was presented in Medina v.
Time, Inc., 439 F.2d 1129 (1st Cir. 1971) (per curiam). In Medina,
the plaintiff sued a magazine for published statements of others
concerning the plaintiff's supposed involvement in the My Lai
massacre. Id. at 1129. In a brief opinion, this court held that
the article, read as a whole, was an account of differing
interpretations of the events that occurred at My Lai and that the
article merely raised "questions . . . [concerning] the disparity
of treatment as between [the plaintiff] and others rather than
asserting the accuracy of the accounts published." Id. at 1130.
As such, the article could not support a finding of actual malice.
Id.
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We also find valuable guidance in the decisions of our
sister circuits. In Saenz, a public official sued the author and
publisher of an article which allegedly implied that the plaintiff
was involved in human rights violations. See 841 F.2d at 1311.
Although the Seventh Circuit held that the article in question,
while somewhat ambiguous, was capable of bearing the defamatory
accusation alleged by the plaintiff, the court affirmed the
district court's granting of summary judgment. The court concluded
that the plaintiff failed to adduce sufficient evidence on the
element of actual malice "primarily because, rather than
demonstrating that [the author] or [publisher] intended to label
him a torturer, the bulk of his evidence merely indicates that the
defendants could not reasonably have concluded that he was a
torturer." Id. at 1318 (emphasis supplied).
A similar lesson is found in Newton v. National
Broadcasting Co., Inc., 930 F.2d 662 (9th Cir. 1990). There, the
Ninth Circuit addressed a defamation claim by the entertainer Wayne
Newton against a broadcasting company and several broadcast
journalists after they aired a report about Newton's relationship
with the Mafia and his purchase of a casino. Id. at 667. The
trial court held that the story created the unmistakable impression
that Newton, facing financial problems, called a Mafia friend who
helped him fund his purchase of a casino in exchange for a hidden
interest in the venture. Id. The trial court further held that
even if the defendants "unintentionally left the impression" that
Newton's purchase was funded in part by organized crime, they
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"should have foreseen" that meaning would be communicated to
others. Id. at 680. The Ninth Circuit reversed that finding and
held that a defamatory implication that "should have been foreseen"
by the defendants could not give rise to liability. Id. The court
noted that the actual malice test is deliberately subjective. Id.
Resort to an objective standard for actual malice, reasoned the
court, "would permit liability to be imposed not only for what was
not said but also for what was not intended to be said." Id. at
681.
Taken together, Medina, Saenz, and Newton demonstrate
that Howard's attempt to build a case of actual malice for
implications arising from Antilla's article must be doomed to fail.
As in Medina, Antilla's article is essentially an account of two
sides of an issue in which she merely raises questions concerning
the authorities' treatment of the dispute. And in the same vein as
both Saenz and Newton, the evidence before the jury in this case
showed, at most, that Antilla should have foreseen the potential
interpretation of her article as accusing Howard of being
Finkelstein. But only a strained reading of the article itself
would yield such an accusation. Thus, we think that Howard failed,
as a matter of law, to meet his burden of proving that Antilla
intended or knew that the article falsely accused Howard of being
a known felon.
Relying on the Supreme Court's decisions in Connaughton
and Hill, Howard argues that the jury could have found malice by
clear and convincing evidence based on significant omissions of
-21-
fact in Antilla's article. In particular, Howard points to
evidence at trial demonstrating that Antilla was in possession of
a copy of Howard's passport, which showed that Howard was traveling
abroad while Finkelstein was reported to be either in prison or out
on bail pending sentencing for violations of federal securities
law. Antilla's article does not include this information, which
Howard argues would have clearly refuted the short sellers' rumor.
This evidence is certainly probative of subjective
awareness of probable falsity. However, Antilla's omissions cannot
carry the heavy freight of establishing actual malice by the
measure of convincing clarity. In Connaughton, the newspaper used
a single source as the basis for a highly improbable story that a
candidate for judicial office had offered a bribe. Id. at 691-92.
In addition, the author deliberately refused to listen to tape
recordings that clearly exonerated the plaintiff of the accused
wrongdoing. Id. at 692. Based on these facts, the Supreme Court
upheld the jury's finding of actual malice. Id. at 693. Unlike
the article's author in Connaughton, however, Antilla sought
information regarding her story from upwards of thirty sources.
She compared the rumors circulated by the short sellers with the
information that Howard and his son were willing to divulge. She
also sought independent confirmation of the facts from the SEC and
lawyers that had previously represented Finkelstein. While Antilla
was clearly stingy in providing facts from which a reader might
infer that Howard was probably not Finkelstein, this is not enough
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to sustain the conclusion that her article intentionally or
reckless asserted that Howard was in fact Finkelstein.
Antilla admits that her failure to correlate the dates in
Howard's passport with Finkelstein's jail time was an oversight,
and concedes that she "should have seen it." However, she explains
her failure to appreciate the significance of these facts by
pointing to the 1500 pages of notes and documents in her
investigative file. Howard argues that he introduced ample
evidence (like a notation on the notes regarding Howard's passport
dates showing Antilla knew Finkelstein was only released from
prison in 1993) from which the jury could reasonably infer that the
failure to include the exculpatory evidence was intentional, or at
least reckless. However, as Antilla points out, the actual period
of incarceration is set forth in a separate document. Thus, this
is not a situation involving an obdurate refusal to listen to a
clearly exculpatory tape, but, at worst, a negligent failure to
connect the dots in a voluminous paper trail. Cf. Brown v. Hearst
Corp., 54 F.3d 21, 25 (1st Cir. 1995) (in a defamation suit by a
private plaintiff, finding no counterbalancing exculpatory evidence
that was withheld that would support a claim of negligence).
Hill is also distinguishable. In Hill, the Supreme Court
considered a statutory false-light action in which the plaintiff
alleged that the defendants had falsely reported that a new
Broadway play "re-enact[ed]" the plaintiff's family's experience in
being held hostage by three escaped convicts. 385 U.S. at 376-77.
Based on the defendants' awareness of the true facts surrounding
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the plaintiff's experience, the Court ruled that the jury could
reasonably conclude from the evidence in the case that the
defendants had engaged in knowing falsehood or had recklessly
disregarded the truth. Id. at 394. Hill, however, provides
uncertain guidance in this case because it involved an invasion of
privacy claim by a non-public figure. As the Court explained:
We find applicable here the standard of
knowing or reckless falsehood, not through
blind application of New York Times Co. v.
Sullivan, relating solely to libel actions by
public officials, but only upon consideration
of the factors which arise in the particular
context of the application of the New York
[invasion of privacy] statute in cases
involving private individuals . . . . [A]
different test might be required in [an
invasion of privacy action] by a public
official, as opposed to a libel action by a
public official or a statutory action by a
private individual . . . .
Id. at 390-91. Moreover, Hill involved a far more direct assertion
by the defendants that a fictionalized story "re-enacted" events
that actually occurred. This makes Hill a poor analog to the case
before us, in which Antilla's article assumed only an ambivalent
stance toward the truth or falsity of the allegedly harmful
statement. Also, the plaintiff in Hill adduced an overwhelming
amount of evidence that the defendants were aware of the falsity of
their statement. In comparison, Howard's evidence of actual malice
was relatively weak, and its force was diluted further by the
undisputed fact that Antilla made efforts to include information in
the article tending to discredit those who circulated the rumor.
In sum, based on our constitutionally-mandated
independent review of the evidence on actual malice, we can
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conclude only that, even if Antilla's article was capable of
communicating the accusation that Howard is a convicted felon, such
a false accusation was not shown to be either intentional or
treated with reckless disregard. Thus, a verdict in Howard's favor
cannot be supported.
IV.
For the reasons stated above, we vacate the jury's
verdict on the false light claim and remand the case to the
district court with instructions that judgment be entered in favor
of the defendant/appellant.
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APPENDIX
A. ARTICLE
Is Howard Really Finkelstein?
Money Rides on It
By Susan Antilla
Is Robert Howard really Howard Finkelstein? A
lot of investors in Mr. Howard's Presstek
Inc., would like to know. But not even the
Securities and Exchange Commission can say for
sure. And the lingering mystery has roiled a
hot stock and left the S.E.C. blushing.
Investors count on the S.E.C. to weed out
rogues in the universe of publicly traded
companies, paying particular attention to
repeat offenders. Sometimes, though, the
agency slips up through bad record-keeping or
incomplete research, inadvertently setting the
backdrop for confusion in the markets.
Unsuspecting investors in Presstek, run by its
chairman, Robert Howard, no doubt wondered
what had happened in early fall to stall a
four-month rally in their stock. Presstek, a
company that sells imaging technology to
makers of printing presses, had reported no
startling news that would explain the 16
percent plunge in the stock in September and
the 13 percent fall that followed this month.
But behind the scenes, a rumor was sweeping
the market that the chairman of Presstek had
been concealing an ugly past. The story that
made the rounds: Mr. Howard, founder of
Presstek in 1987, was Howard Finkelstein, a
convicted felon who went to jail for
violations of securities laws, among other
things.
Mr. Howard denies that he is Mr. Finkelstein,
and the rumor should have been easy enough to
confirm or quell, easing the anxiety of
investors who did not know whether to buy,
sell or sit tight. After all, the S.E.C. as
recently as February settled an insider
trading case against the Robert Howard who
runs both Presstek and another public company
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called Howtek, both in Hudson, N.H. The
S.E.C. said Mr. Howard had given an illegal
tip about Howtek's outlook to a friend on a
golf course and had fined and censured him.
The S.E.C. did search its files for Mr. Howard
but it did not find its own public
announcements from the mid-1970's, including
the one in 1976 that referred to the criminal
conviction of "Howard Finkelstein (also known
as Robert Howard)" for securities law
violations.
"We did what we would normally do in checking
records and checking our data base," said
William McLucas, chief of the enforcement
division of the S.E.C. in Washington. But the
previous case against Howard Finkelstein alias
Robert Howard "didn't pop up," Mr. McLucas
conceded, explaining that it appeared that no
one cross-referenced the alias of a convicted
felon in the S.E.C.'s computerized records
that date back to 1974.
"Would I have preferred we'd put the names in
and flipped them in both instances?" Mr.
McLucas asked. "Yes. But the names may not
have been entered into the computer data base
when the data was put into the system way back
when."
While Mr. McLucas acknowledged there was a
record-keeping problem in this case, he said
he did not think that dual identities posed a
serious problem for his enforcement unit.
Had S.E.C. employees systematically made two
entries on every alias when the agency set up
its computerized data base in 1984, the
Howard/Finkelstein case would have come up.
That would not have told the S.E.C. that the
Presstek chairman was Mr. Finkelstein. But it
may have raised investigators' suspicions,
caused them to query Mr. Howard about the
possible Finkelstein connection, and perhaps
given them a reason to investigate further to
determine who Robert Howard was. Lacking the
computer entry of the alias, though, the
agency never got to the first step.
The S.E.C. still cannot say whether the Robert
Howard of Presstek is or is not the same
-27-
Robert Howard who operated as Howard
Finkelstein.
"Our records don't indicate that he is anyone
else," said Mr. McLucas, referring to the
Presstek chairman. But "we have not at this
point in time taken his fingerprints," he
added.
The S.E.C. may not have found the previous
case but the short-sellers did.
Short-sellers, who profit by placing bets that
a stock will decline, found out about the
Finkelstein question and used the connection -
- regardless of whether it is true -- to try
to push the price lower. Their effort, and the
fact that the S.E.C. was unaware of the
identity issue at all, is what has made
Presstek and Mr. Howard (and perhaps Mr.
Finkelstein) a market story over the last
several months.
The short-sellers did their own research on
the heels of the February S.E.C. case, and
discovered the other S.E.C. case that the
S.E.C.'s own investigators missed. In that
case "Howard Finkelstein, a.k.a. Robert
Howard" had illegally swapped securities for
fur coats in a scam in the late 1960's. Mr.
Finkelstein alias Mr. Howard went to jail for
that and other infractions, including a
conviction for a violation of the Mann Act
that prohibits transportation of women across
state borders for immoral purposes.
Pushing the Finkelstein connection, the
short-sellers apparently were able to worry
investors enough to create selling of Presstek
that pushed the price down on heavy volume
from a peak of $48.75 a share on Sept. 13 to
$41 a share on Sept. 23 and from $47.50 on
Sept. 28 to $41 on Oct. 5. Yesterday, it
closed at $41.25, down 75 cents.
Mr. Howard of Presstek vehemently denies that
he is the Mr. Howard with the alias of
Finkelstein. The rumor "is absolutely,
unequivocally not true," he said in a recent
telephone interview from his home in St.
Jean-Cap-Ferrat, France. But some gaps in the
Howard family's effort to prove this and the
S.E.C.'s own uncertainty leave some doubt.
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In pursuing its insider trading case against
Mr. Howard earlier this year, the S.E.C. asked
the Presstek chairman: "Are there any other
names that you are known by besides Robert
Howard?" according to two pages of the
transcript supplied by Lawrence Howard, Mr.
Howard's son. (The New York Times has asked
for the entire transcript from the S.E.C.,
under the Freedom of Information Act. Robert
Howard's lawyer, Larry Iason, has filed an
objection to that request.) His answer,
according to the pages supplied by Lawrence
Howard: "Well, my name at birth was Robert
Horowitz."
During a meeting last week in New York,
Lawrence Howard supplied extensive documents
to show his father's addresses at various
times. His father's birth certificate shows a
birth date of May 19, 1923, while court
documents show that Mr. Finkelstein's birth
date is April 23, 1929.
A telephone listing in Winter Park, Fla., Mr.
Finkelstein's last known address, was
unpublished. One lawyer who represented him
in a 1974 stock fraud case said he would not
be able to remember what his client looked
like. Supplied with a photograph of Mr.
Howard of Presstek, another lawyer for Mr.
Finkelstein said he "couldn't swear to it,"
but thought it was his former client.
Several prosecutors from the securities case
in the 1970's said they could not remember
details about Mr. Finkelstein. A gynecologist
who wrote a letter to a judge defending Mr.
Finkelstein could not be found. Other
questions also remain. Not the least of which
have to do with the reluctance of Lawrence
Howard to be forthcoming about several
questions.
Asked to supply names of his father's children
and stepchildren, for example, Lawrence Howard
would entertain the question only if first
supplied with the names of Mr. Finkelstein's
children and stepchildren. Asked for a full
copy of his father's S.E.C. testimony,
Lawrence Howard declined.
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Lawrence Howard, a psychiatrist who was
formerly president of Presstek, is now a vice
chairman. Three months ago, he joined Whale
Securities in New York, working in its
corporate finance department. Whale, which
was fined by the National Association of
Securities Dealers in 1992 for excessive
markups of a stock it had taken public, was
the underwriter for both Howtek and Presstek.
Robert Howard, meanwhile, carries baggage that
would be of interest to shareholders and would
have been ammunition for short-sellers even if
it was clear that Robert Howard was not Howard
Finkelstein.
In 1967, Mr. Howard founded a personal
computer printer company whose shares soared,
then plunged, before he sold the company and
resigned. Two gambling ventures have gone
under, the last in 1981.
In more recent history, earnings per share at
Presstek plunged last year to 17 cents from 63
cents in 1992. Last October, James L. Bast
resigned as president and chief executive
after only four months, raising the question
of who is minding the company store.
In the absence of an airtight record-keeping
system at the S.E.C. this type of identity
confusion could happen again. And that is
apart from other ways in which unscrupulous
operators can deceive the agency. An article
in Business Week magazine last month
chronicled the checkered history of a chief
executive who had a sex-change operation. The
S.E.C. censured the executive twice for
violations of securities rules -- once when
she was a man and again after the operation.
When the S.E.C. censured the executive in
1991, it was the first case by the agency
against Eleanor Schuler, but the second
against John Huminik Jr., whose sex-change
operation was chronicled in People magazine in
1979. Mr. McLucas said there were limits to
what the S.E.C. could reasonably be expected
to do in investigations.
"I'm not sure what else the Government can do
in civil investigations where we take
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thousands of witnesses a year," Mr. McLucas
said. "Do you throw them down and say 'tell
the truth or we'll throw the hot light on
you?' Rubber hoses went out years ago -- the
Constitution doesn't let you do those things
anymore."
As for the Presstek chairman, will the S.E.C.
be investigating further to get the right
information out to the public markets? "I'm
not going to say what we may or may not do at
this point," he said.
B. SIDE BAR
Wall St. Story: Jumbled Fact
Short-sellers are frequently a much-needed
balance in the markets, debunking some of the
hype on public companies. But sometimes they
go too far.
One short-seller promoting the story on Wall
Street that Robert Howard is Howard
Finkelstein, who spoke on the condition of
anonymity, said he had a copy of S.E.C.
testimony in which Mr. Howard, the Presstek
chairman, admitted to going by the last name
of Finkelstein. (In fact, Mr. Howard told the
S.E.C. his original last name was Horowitz.)
The short-seller also said that directory
assistance in Hudson, N.J., was giving out the
same telephone number for both Howard
Finkelstein and Robert Howard. Not only that,
he said, but calls to that number for
Finkelstein were forwarded to Howtek, one of
Mr. Howard's two companies.
But there is no city called Hudson in New
Jersey. And Howtek and Presstek are
headquartered in Hudson, N.H., where there is
no listing for a Howard Finkelstein.
C. CORRECTION
An article in Business Day yesterday discussed
rumors affecting the stock of Presstek, an
imaging technology company. The rumors
suggested that Presstek's chairman, Robert
Howard, might actually be Howard Finkelstein,
a convicted felon.
-31-
Mr. Howard's lawyers presented The Times
yesterday with documents and other information
regarding his identity. After inspecting
them, The Times finds no credible evidence to
support the rumor. Details appear today on
page D1.
The Times regrets having printed the rumor.
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