Marcone, Frank J. v. Penthouse International Magazine For Men

Once again this Court is called upon to chart the proper course between the Scylla of inadequately guaranteeing First Amendment protections and the Charybdis of diminishing an individual's right to reputation. Plaintiff Frank Marcone brought suit for libel against Penthouse, the International Magazine for Men and Penthouse International, Ltd. (collectively Penthouse). The district judge determined that Marcone was not a public figure and therefore charged the jury that it could award him compensatory damages upon a showing that the publisher was negligent. The jury awarded Marcone compensatory as well as punitive damages. Because the district judge erred in not classifying Marcone as a limited purpose public figure and because plaintiff failed to prove that the libelous statement was made with actual malice, the standard prescribed in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), we will reverse.

Marcone is an attorney residing in Delaware County, a suburb of Philadelphia. During the mid-1970's he gained notoriety in part through his representation of the Pagans, a motorcycle gang headquartered in Marcus Hook, Pennsylvania, and a rival gang, the Warlocks. Marcone was also linked to these motorcycle gangs on a non-professional basis. In this regard, law enforcement agents stated that Marcone frequented "the Castle," a 40-room mansion in Delaware County which served as the Pagans' headquarters. Among other things, the Castle was connected with the disappearance and death of five young women in 1976. An article in the Philadelphia Inquirer dated March 18, 1976, reported that Marcone once stated that he "occasionally went on weekend trips" with one of the motorcycle gangs. App. at 198a(5).

In February of 1976, a grand jury in Detroit, Michigan, handed down an indictment charging Marcone and 24 other co-defendants with conspiring "to knowingly, intentionally and unlawfully possess with intent to distribute, and to distribute marijuana" in violation of 21 U.S.C. Secs. 841(a)(1), 846 (1982). In particular, the indictment charged that "[d]uring May, 1974, FRANK MARCONE gave $25,000 in United States currency to FREDERICK R. FREY in Philadelphia, Pennsylvania for the purpose of purchasing multi-hundred pound quantities of marijuana in California." Law enforcement agents stated that Marcone and the three other co-defendants from the Philadelphia area had frequent meetings at the Castle.

On May 19, 1976, the government withdrew the charges against Marcone without prejudice to his being reindicted in Philadelphia. An assistant United States Attorney in Detroit explained that the charges were dropped because of "legal technicalities" in tying Marcone to the larger conspiracy which involved defendants from San Diego to Montreal. For reasons not explained in the record, Marcone was not subsequently reindicted in Philadelphia.

Penthouse published an article in its November 1978 issue entitled "The Stoning of America." Written by Edward Rasen, the article concerned the emergence of marijuana trade as a multibillion dollar industry. The subtitle stated that "marijuana is now big agribusiness--a $12 billion a year corporate growth crop." The article proceeded to report, in part, about "criminal attorneys and attorney criminals" involved in drug transactions:

[T]he typical new dope businessman is an attorney. "We have criminal attorneys and attorney criminals," says Fred Rody, Miami DEA regional director. "There is such a thing as criminal consort. We know that some of the large smuggling operations have lawyers who are providing them with all the advice they need to operate."

However, even after DEA agents spent more than two years building an airtight case against a Mexican-American syndicate involved in the multi-million-dollar, nationwide wholesaling of marijuana, federal judges did not sentence any of the attorney criminals to prison.

Examples: Richard J. Litner, a practicing attorney in Boston, financed sales in New England and set up "cover" corporations, yet was offered the opportunity by federal judge Charles W. Joiner, without the consent of the prosecutor, to plead guilty to reduced charges. He was then placed on one-year probation so that he would not be disbarred and deprived of his livelihood. Attorney John K. Lowe, of Denver and Kansas City, made a hand-to-hand sale of 400 pounds of marijuana to an undercover agent for $40,000. He received two years' probation and a $1,000 fine. As a law student, George Weingarten, now a practicing attorney in San Diego, once received a gold Rolex wristwatch as a sales reward for distributing 10,000 pounds of marijuana in one week. He became a DEA informant in exchange for a reduced sentence of one-year probation. Maria Blanca-Vargas Reid, executive director of the San Diego Mental Health Association, handled a $35,000 drug payment. Charges were dismissed in the interest of justice after she cooperated with federal authorities and revealed the whereabouts of her son, Robert Craig Chipman, and his criminal associates. Frank Marcone, an attorney from the Philadelphia area, contributed down payments of up to $25,000 on grass transactions. Charges against him were dismissed because he cooperated with further investigations. Charles Sargent Hewett, a law student from Corona Del Mar, Calif., wholesaled up to $750,000 of marijuana per week. Charges were dismissed at the request of the U.S. attorney's office for his cooperation in identifying all the people he sold to, even though he was involved in the murder of his former distributor in Boston and the attempted murder of one of his associates from San Francisco. And so on.

App. at 21a (emphasis added).

Marcone brought suit against Penthouse charging that the article libeled him since it declared that he was guilty of an offense for which he was only indicted, and since it stated that charges were dropped against him because he cooperated with the authorities. Plaintiff alleges that these two statements are untrue and that they have caused him harm and subjected him to ridicule.

Penthouse moved for summary judgment on six grounds, including that Marcone was a public figure and was unable to make the showing of actual malice required by New York Times and its progeny. The district court denied the motion, Marcone v. Penthouse International, Ltd., 533 F.Supp. 353 (E.D. Pa.1982), and the case proceeded to trial.

Shortly before trial, the district judge ruled that the article was libelous per se; that Marcone was not a public figure; and that Pennsylvania would adopt a negligence standard for private figures regardless of whether the article involved matters of public concern. The case was tried before a jury which returned a verdict for Marcone of $30,000 actual damages and $537,000 punitive damages. The district judge rejected Penthouse's post trial motions for judgment n.o.v. or a new trial, but ordered a remittitur reducing the punitive damages to $200,000 because he found the jury's award to be "so grossly excessive as to shock the conscience of the Court." Marcone v. Penthouse International, Ltd., 577 F.Supp. 318, 335 (E.D. Pa.1983). Marcone accepted the remittitur on December 20, 1983, and Penthouse appealed from the final judgment, which as modified consists of $30,000 in actual damages and $200,000 in punitive damages.

Although replete with First Amendment implications, a defamation suit fundamentally is a state cause of action. The parties here agree that Pennsylvania law applies. Inasmuch as Marcone is a Pennsylvania resident and any harm to his reputation that may have occurred centered in that state, the district court was correct to apply Pennsylvania law. See Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 269-70 (3d Cir.1980); Pierce v. Capital Cities Communications, Inc., 576 F.2d 495, 501-02 (3d Cir.), cert. denied, 439 U.S. 861, 99 S.Ct. 181, 58 L.Ed.2d 170 (1978).

An adjudication of a defamation case involves both state and federal law inquiries. A court must determine: "(1) whether the defendants have harmed the plaintiff's reputation within the meaning of state law; and (2) if so, whether the First Amendment nevertheless precludes recovery." Steaks Unlimited, 623 F.2d at 270.

Thus our initial inquiry is whether plaintiff has made a proper claim under state law. To recover in a libel action under Pennsylvania law, plaintiff has the burden of proving, when properly raised:

(1) The defamatory character of the communication.

(2) Its publication by the defendant.

(3) Its application to the plaintiff.

(4) The understanding by the recipient of its defamatory meaning.

(5) The understanding by the recipient of its as intended to be applied to the plaintiff.

(6) Special harm resulting to the plaintiff from its publication.

(7) Abuse of a conditionally privileged occasion.

42 Pa. Cons. Stat. Sec. 8343(a) (1982); see also Corabi v. Curtis Publishing Co., 441 Pa. 432, 273 A.2d 899 (1971); Agriss v. Roadway Express, Inc., 483 A.2d 456 (Pa.Super.1984). Penthouse challenges Marcone's claim on several of these grounds.

First, defendant contends that plaintiff has not met the burden of proving the article's defamatory character. This is so, Penthouse maintains, because the questioned remarks are incapable of defamatory meaning. Whether a statement is capable of defamatory meaning is a question the judge, as distinguished from the jury, must determine, see Franklin Music Co. v. American Broadcasting Cos., Inc., 616 F.2d 528, 540 (3d Cir.1979); Corabi, 441 Pa. at 442, 273 A.2d at 904 (1971), and the district court ruled that the article was capable of a defamatory meaning.

According to Pennsylvania law, a statement is defamatory if it "tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Corabi, 441 Pa. at 442, 273 A.2d at 904 (quoting Cosgrove Studio and Camera Shop, Inc. v. Pane, 408 Pa. 314, 318, 182 A.2d 751, 753 (1962)). The threshold determination of whether a statement is capable of defamatory meaning depends "on the general tendency of the words to have such an effect"; no demonstration of any actual harm to reputation is necessary. Agriss, 483 A.2d at 461.

Penthouse attempts to demonstrate that each individual phrase in the article, in isolation, cannot be understood as libelous. Thus, for example, it asserts that "cooperated with further investigations" cannot be defamatory. The proper test, however, requires that the allegedly libelous communication be read as a whole, in context. Corabi, 441 Pa. at 444, 273 A.2d at 906; Agriss, 483 A.2d at 461.

As the district court observed, "The Stoning of America" refers to "attorney criminals" and lists as one of the examples:

Frank Marcone, an attorney from the Philadelphia area, contributed down payments of up to $25,000 on grass transactions. Charges against him were dismissed because he cooperated with further investigations.

This statement suggests that Marcone has committed a crime. Statements imputing the commission of an indictable offense are capable of defamatory meaning as a matter of law. See Baird v. Dun & Bradstreet, 446 Pa. 266, 274, 285 A.2d 166, 171 (1971); see also Agriss, 483 A.2d at 470. Thus Penthouse's argument that the article could not possibly have defamed Marcone is not valid.

Defendants next contend that even if its article was capable of being defamatory, Marcone's reputation in the community was so tarnished before the publication that no further harm could have occurred. Penthouse's assertion is that Marcone was, in effect, libel proof before the publication of the allegedly libelous statement. See Cardillo v. Doubleday & Co., 518 F.2d 638, 639-40 (2d Cir.1975); Sharon v. Time, Inc., 575 F.Supp. 1162, 1168-72 (S.D.N.Y.1983); Wynberg v. National Enquirer, Inc., 564 F.Supp. 924, 927-28 (C.D.Cal.1982).

In Wynberg, for example, the court held that a plaintiff, who had a brief but highly publicized romance with Elizabeth Taylor was libel proof. 564 F.Supp. at 928. Wynberg had been convicted of criminal conduct on five separate occasions, including a conviction for contributing to the delinquency of minors. The court concluded thatWhen, for example, an individual engages in conspicuously anti-social or even criminal behavior, which is widely reported to the public, his reputation diminishes proportionately. Depending upon the nature of the conduct, the number of offenses, and the degree and range of publicity received, there comes a time when the individual's reputation for specific conduct, or his general reputation for honesty and fair dealing is sufficiently low in the public's estimation that he can recover only nominal damages for subsequent defamatory statements.

Id.

To bolster its claim that Marcone is entitled only to nominal damages, Penthouse cites a string of items of negative publicity regarding Marcone, from 1976 onward. For example, his indictment in connection with drug trafficking in 1976 was widely publicized in the Philadelphia-area media. Moreover, a number of newspaper articles linked Marcone to the Castle, a gathering place for motorcycle gangs and a haven for a variety of illegal activities. In addition, in 1978 Marcone was tried for failing to file Federal Income tax returns for 1971 and 1972. Marcone was tried for criminal income tax evasion in 1978, and although the case ended in a hung jury, it was widely reported by the local media. Marcone was also fined at least twice for contempt of court for his failure to appear at scheduled hearings. The second of these contempt convictions occurred in 1979, however, after the Penthouse article was published. Finally, in 1978 Marcone was fined for punching a police officer who had stopped Marcone's car for a traffic violation.

While such evidence suggests that Marcone's reputation was sullied before the article was published, we cannot say as a matter of law that Marcone was libel proof. See Buckley v. Littell, 539 F.2d 882, 889 (2d Cir.1976) (libel proof doctrine is narrow), cert. denied, 429 U.S. 1062, 97 S.Ct. 785, 50 L.Ed.2d 777 (1977); Sharon v. Time, 575 F.Supp. at 1169. Evidence of a tarnished reputation is admissible and should be considered as a factor to mitigate the level of compensatory damages. Corabi, 273 A.2d at 920. In the present case, the jury was informed of the evidence regarding Marcone's reputation, and its verdict for compensatory damages may well reflect the diminished status of Marcone in November of 1978.

Penthouse insists that Marcone's suit must be dismissed because he failed to prove any actual economic harm. This argument has both constitutional as well as state law dimensions.

In Gertz v. Robert Welch, Inc., 418 U.S. 323, 349-50, 94 S.Ct. 2997, 3011-12, 41 L.Ed.2d 789 (1974), the Supreme Court placed a number of limitations on state tort actions for defamation. One restriction was that plaintiffs may recover compensation for "actual injury" but not presumed or punitive damages unless the heightened New York Times actual malice standard is used. The Court defined actual injury as

not limited to out-of-pocket loss. Indeed, the more customary types of actual harm inflicted by defamatory falsehood include impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering. Of course, juries must be limited by appropriate instructions, and all awards must be supported by competent evidence concerning the injury, although there need be no evidence which assigns an actual dollar value to the injury.

Gertz, 418 U.S. at 350, 94 S.Ct. at 3012. Thus proof of actual economic loss is not required to recover compensatory damages as a matter of federal constitutional law.

Penthouse's assertion regarding the significance of Marcone's failure to prove "special damages" is also not in conflict with Pennsylvania law. The district court held that the article constituted libel per se and thus proof of special damages was not required. 533 F.Supp. at 361.

In a recent decision, the Superior Court of Pennsylvania has elucidated the arcane yet still utilized terms libel and slander per se and libel and slander per quod.1 See Agriss v. Roadway Express, Inc., 483 A.2d 456, 468-74 (Pa.Super.1984). In Agriss, the Superior Court reasserted the traditional rule under Pennsylvania law that a plaintiff may recover in a libel suit without proving special damages. Id. at 474. Thus Marcone need not have established any actual pecuniary harm.2 Under Pennsylvania law Marcone was entitled to recover for injury to his reputation as well as for personal humiliation and mental anguish as long as he presented competent evidence of such harm. Corabi, 273 A.2d at 919-20; Montgomery v. Dennison, 363 Pa. 255, 267-68, 69 A.2d 520, 527 (1949).

Marcone testified that he was "frustrated, distraught, upset, and distressed about the article and its effect on his family and friends, in that it revived the charges which he thought had been laid to rest two years previously." Marcone, 577 F.Supp. at 333. He also stated that he feared "retribution against his family by clients who imagined themselves the victims of his alleged cooperation" with the government. Id. While Marcone's testimony contained some inconsistencies, it was possible for the jury to assess his credibility and determine whether he actually suffered any harm. Consequently, the evidence of harm to reputation and mental anguish, while not overwhelming, was sufficient under Pennsylvania law to permit recovery for Marcone's "actual damages" as defined in Gertz.

Penthouse next argues that because Marcone was a public figure the district court erred in applying a negligence rather than an actual malice standard to prove liability for actual damages. The Supreme Court has mandated that in order for public officials or public figures to recover damages in a defamation case, they must prove that the statement was published with "actual malice." See, e.g., New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964).

Prior to 1964, the law of defamation was not viewed as falling within the ambit of the First Amendment, and thus was primarily left to state law. Emphasizing the "profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide open," the Supreme Court, in the landmark decision of New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S.Ct. 710, 720, 11 L.Ed.2d 686 (1964), extended First Amendment coverage to defamation concerning the conduct of public officials. The Court granted First Amendment protection to negligently false statements in order to afford the media the "breathing space" necessary to avoid a chilling effect on constitutionally valuable speech, a matter of critical importance to our democratic system. Id. at 271-72, 84 S.Ct. at 721-22 (quoting NAACP v. Button, 371 U.S. 415, 433, 83 S.Ct. 328, 338, 9 L.Ed.2d 405 (1963)).3 Therefore the Court required public officials who sue for defamation to prove that an allegedly defamatory 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." Id. at 279-80, 84 S.Ct. at 725-26.

Three years later, the Supreme Court extended the actual malice standard for public officials to "public figures" in the companion cases of Curtis Publishing Co. v. Butts and Associated Press v. Walker, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). Together, these opinions attempted to strike a proper balance between the First Amendment concerns for open debate on public issues and the need of an individual to protect his reputation. See also Hutchinson v. Proxmire, 443 U.S. 111, 99 S.Ct. 2675, 61 L.Ed.2d 411 (1979); Gertz v. Robert Welch, Inc., 418 U.S. 323, 342, 94 S.Ct. 2997, 3008, 41 L.Ed.2d 789 (1974).

In Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 44, 91 S.Ct. 1811, 1820, 29 L.Ed.2d 296 (1971), a plurality opinion of a fragmented Supreme Court extended the New York Times actual malice standard to all "matters of public or general concern." This zenith of First Amendment protection proved transitory, however, and after three years the Court rejected Rosenbloom's issue-oriented approach to defamation cases. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). Instead, the Court focused on the private or public status of the plaintiff as the determinative factor in striking the proper balance between individual reputation, freedom of the press, and robust public debate. The actual malice standard still governed for public officials and public figures, but not for private figures. Id. at 347, 94 S.Ct. at 3010.

Gertz justified the distinction between public and private figures on two grounds. First, public officials and public figures have "greater access to the channels of effective communication and hence have a more realistic opportunity to counteract false statements than private individuals normally enjoy." Id. at 344, 94 S.Ct. at 3009. Because private individuals have less access to effective self help, such individuals are more vulnerable to injury and the state has a correspondingly greater interest in protecting them.

More importantly, the Court in Gertz stated that individuals who seek public office or who are public figures have assumed the risk that in the course of reporting and commenting on a well known person or public controversy, the press may inadvertently make erroneous statements about them. Thus those individuals are less deserving of protection. See id. at 344-45, 94 S.Ct. at 3009-10; see also Wolston v. Reader's Digest Ass'n, Inc., 443 U.S. 157, 164, 99 S.Ct. 2701, 2705, 61 L.Ed.2d 450 (1979).

In considering a defamation case after Gertz, a court is required to ascertain in the first instance whether the plaintiff is a public figure.4 Public officials and public figures must prove actual malice. Regarding private figures, however, the Court held that states could define the appropriate standard for liability, "so long as they do not impose liability without fault." Gertz, 418 U.S. at 347, 94 S.Ct. at 3010.

The Supreme Court has not provided a detailed chart of the contours of the public and private figure categories. In an attempt to avoid "unpredictable results and uncertain expectations," the Court elected to paint with a broad brush rather than to adopt a case by case approach. Gertz, 418 U.S. at 343-44, 94 S.Ct. at 3008-09. Without a precise diagram for guidance, courts and commentators have had considerable difficulty in determining the proper scope of the public figure doctrine.5 One district court opined that the task of demarcating between public and private figures "is much like trying to nail a jelly fish to the wall." Rosanova v. Playboy Enterprises, Inc., 411 F.Supp. 440, 443 (S.D.Ga.1976), aff'd, 580 F.2d 859 (5th Cir.1978).

In Gertz, the Court described two classes of public figures: all purpose public figures and limited purpose public figures. Some individuals "occupy positions of such persuasive power and influence that they are deemed public figures for all purposes." 418 U.S. at 345, 94 S.Ct. at 3009. The Court further stated that such a person achieves "such pervasive fame or notoriety that he becomes a public figure for all purposes and in all contexts." Id. at 351, 94 S.Ct. at 3013.6

More common are individuals deemed public figures only in the context of a particular public dispute. These limited purpose public figures become involved in particular public controversies. Id. at 345, 94 S.Ct. at 3009. As the Court explained, a limited purpose public figure is "an individual [who] voluntarily injects himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited range of issues." Id. at 351, 94 S.Ct. at 3013.

Penthouse does not contend and we cannot hold that Marcone developed such pervasive notoriety in the community that he should be deemed a public figure for all purposes. See Gertz, 418 U.S. at 352, 94 S.Ct. at 3013 ("Absent clear evidence of general fame or notoriety .... It is preferable to reduce the public-figure question to a more meaningful context by looking to the nature and extent of an individual's