Case Title

Appeal from judgment of Circuit Court for Multnomah County, Richard L. Unis, Judge. 65 Or App 29, 670 P2d 616 (1984).

DISPOSITION: The decision of the Court of Appeals is affirmed the case is remanded to the Circuit Court.

JUDGES: Peterson, C.J., Lent, Campbell, Roberts, Carson and Jones, Justices. Roberts, J., concurred in part, dissented in part and filed an opinion.

The issue on review is the standard of culpability that these plaintiffs must prove in order for a court or jury to hold media defendants liable for defamation.

Plaintiffs Bank of Oregon and Wadsworth, its president, brought this libel action against defendants Independent News, Inc., publisher of the "Willamette Week," and Buel and Meeker, two reporters for the newspaper. Plaintiffs pleaded that defendants wrote and published an article which was false and defamatory with knowledge of its falsity or reckless disregard of its truth or falsity and with an actual intent to defame plaintiffs. Plaintiffs alleged damages totalling $ 7,400,000 as a result of the defamation. Plaintiffs requested defendants to publish a retraction of the defamatory statements in the article and defendants refused to do so.

The article was entitled "A Lot Off the Top" and dealt at some length with banking transactions involving plaintiffs and Richard Cross, the primary source of information for the article. The article as a whole indicated that plaintiffs had engaged in numerous wrongful acts to divert Cross' money and credit to another bank customer….

The trial judge entered summary judgment for defendants, reading into the record his belief that the plaintiffs must prove gross negligence on the part of defendants to prevail, and that plaintiffs had not demonstrated sufficient facts to prove that defendants, judged by an objective standard, had engaged in reckless conduct. n1 The Court of Appeals reversed and remanded the case. 65 Or App 29, 670 P2d 616 (1983). It held that the proper standard of liability was negligence (the care of a reasonably prudent, careful and skillful journalist) and that summary judgment for defendants was error….

Defendants argue that Article I, section 8 of the Oregon Constitution precludes the imposition of liability without fault for a defamatory publication. Plaintiffs disagree and allege that Article I, section 10 of the Oregon Constitution requires that a remedy be provided for injury to reputation.

"No law shall be passed restraining the free expression of opinion, or restricting the right to speak, write, or print freely on any subject whatever; but every person shall be responsible for the abuse of this right."

"No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation."

A tension exists within Article I, section 8 between the right to communicate on any subject whatever and the abuse of this right. There is no basis under the Oregon Constitution to provide more protection to certain nonabusive communication based upon the content of the communication. Speech related to political issues or matters of "public concern" is constitutionally equal to speech concerning one's employment or neighbors, so long as that speech is not an abuse of the right. See State v. Robertson, 293 Or 402, 435, 649 P2d 569 (1982) ("The right of free expression is as important to many people in their personal and institutional relationships as it is in the narrower 'civil liberties' related to politics, and nothing in Article I, section 8, suggests that it is limited to the latter."). The Oregon Constitution does not recognize hierarchies of speech defaming someone, based on that person's access to the means of rebutting the defamation. The Oregon Constitution does not require a higher standard of proof in a defamation action where the plaintiff is a "public figure" rather than a "private individual."

Article I, section 8 does not provide the media with any protection not available to other citizens. It is settled Oregon law "that in the absence of a statute, newspapers as such have no peculiar privilege but are liable for what they publish in the same manner as the rest of the community." n4 Kilgore v. Koen, 133 Or at 7 (rule consistent with the "liberty of the press" guaranteed by federal and state constitutions); see Wheeler v. Green, 286 Or 99, 117-18, 593 P2d 777 (1979) (Oregon Constitution does not mention separately a "freedom of the press"); see also State ex rel Oregonian Pub. Co. v. Deiz, 289 Or 277, 287, 613 P2d 23 (1980) (Linde, J., concurring) ("Freedom of expression, in Oregon, does not single out the professional press."). For that reason, any standard of liability in defamation cases required by the Oregon Constitution should be the same for all defendants.

No Oregon Supreme Court case interprets the standard of liability under the Oregon Constitution in a defamation action. n5 However, Wheeler v. Green, supra, recognized that statements constituting defamation "have throughout the history of this state been recognized as an abuse of the right of free expression for which a person is to be held responsible under the provisions of Article 1, @ 8." 286 Or at 118.

Two recent cases have held that the common law standard of liability applies where the plaintiff is not a "public figure" and the defendant is not part of the media. Wheeler v. Green, supra; Harley-Davidson v. Markley, 279 Or 361, 568 P2d 1369 (1977). n6 These two decisions do not rest on the Oregon Constitution, but they are supported by Article I, section 10, which provides for "remedy by due course of law for injury [to] reputation." This provision does not require any certain standard of liability in defamation actions, see Davidson v. Rogers, 281 Or 219, 574 P2d 624 (1978), but it does mandate "remedy by due course of law." The remedies provided during over a century of development of the common law of libel and slander, whether using a standard of actual malice or liability without fault, and the defenses developed by common law and provided for by statute, see ORS 30.160, are entitled to constitutional respect. We will not substitute a constitutional standard of liability, applicable in all cases, based on our review of the instant case. The Oregon Constitution does not impose such a minimum standard of liability….

….The question presented is whether the rule in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S Ct 2997, 41 L Ed 2d 789 (1974), prohibiting the state from imposing liability without fault on media defamation defendants, applies to "private" as well as media defendants.

Defendants also argue that the First Amendment to the United States Constitution n7 requires a standard of liability higher than liability without fault in defamation actions. We agree to the extent that if the plaintiffs are "public figures" for purposes of federal constitutional analysis, plaintiffs must prove the false and defamatory statements were published with actual malice; i.e., knowledge of falsity or reckless disregard of truth. New York Times v. Sullivan, 376 U.S. 254, 84 S Ct 710, 11 L Ed 2d 686 (1964); see St. Amant v. Thompson, 390 U.S. 727, 731, 88 S Ct 1323, 20 L Ed 2d 262 (1968) ("high degree of awareness of * * * probable falsity"). If the plaintiffs are not "public figures" and the defendants are part of the media, plaintiffs must prove that the false and defamatory statements were made negligently. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S Ct 2997, 41 L Ed 2d 789 (1974); ….

We must first determine whether plaintiffs are "public figures" under federal caselaw interpreting the first amendment in defamation cases

Gertz v. Robert Welch, Inc., supra, determined that an attorney who represented the family of a boy slain by a police officer was not a public figure. The Court reiterated its two-pronged standard for public figures and stated: "Absent clear evidence of general fame or notoriety in the community, and pervasive involvement in the affairs of society, an individual should not be deemed a public personality for all aspects of his life. 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 participation in the particular controversy giving rise to the defamation."

In Hutchinson v. Proxmire, 443 U.S. 111, 99 S Ct 2675, 61 L Ed 2d 411 (1979), the Court established that the public controversy into which plaintiff may thrust his or her personality must pre-exist the defamatory publication. 443 U.S. at 135. It cannot be created by the publication. Likewise in Wolston v. Reader's Digest Ass'n, Inc., 443 U.S. 157, 99 S Ct 2701, 61 L Ed 2d 450 (1979), the Court held that merely because events involving a private individual attract public and media attention does not transform that private individual into a public figure. 443 U.S. at 167.

Defendants concede that no such pre-existing public controversy was present in the instant case…There simply is no public controversy into which plaintiffs arguably thrust themselves. Merely opening one's doors to the public, offering stock for public sale, advertising, etc., even if considered a thrusting of one's self into matters of public interest, is not sufficient to establish that a corporation is a public figure.

The Bank of Oregon does not present that "exceedingly rare" instance of an entity which is a public figure for all purposes. We find that the bank does not have "general fame or notoriety" in the community in which the article was published nor does it exhibit "pervasive involvement in the affairs of society."

Defendants also argue that Wadsworth is an all purpose public figure. We agree with the Court of Appeals that this argument is "patently unmeritorious," especially in light of the recent emphasis on the limited purpose public figure analysis by the Supreme Court of the United States. Cases cited by defendants and amici in support of this argument are [***21] not helpful or persuasive.

Because neither plaintiff is a "public figure," the New York Times actual malice standard, knowledge of falsity or reckless disregard for truth, is not applicable in the instant case.

Therefore, we reach the other portion of Gertz v. Robert Welch, Inc., supra, which established that a state could not impose liability without fault on a media defendant, even where the plaintiff was a "private individual." There is no question that each of the defendants in the instant case is a media defendant, entitled without doubt to the protection provided in Gertz.

In order to protect the first amendment rights of the instant defendants, plaintiffs must prove that the false and defamatory statements were made negligently, i.e., without due care to ascertain whether they were true. In addition, Gertz mandates that "[i]t is necessary to restrict defamation plaintiffs who do not prove knowledge of falsity or reckless disregard for the truth to compensation for actual injury." 418 U.S. at 349. The Court stated that "actual injury is not limited to out-of-pocket loss" but includes "impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering." 418 U.S. at 350.

The standard of care for those allegedly defamatory statements that require proof of negligence should be ordinary negligence, neither gross negligence as suggested by the trial judge nor the care of a reasonably prudent, careful and skillful journalist as held by the Court of Appeals. We agree with the Court of Appeals, however, that comparison of defendant's conduct to a community standard is but one factor in determining whether the standard of care has been met. It remains possible that behavior which conformed to local practice would nevertheless be negligent.

Because the standard of liability for at least some of the allegedly defamatory statements is negligence, summary judgment was not proper in the instant case….

The decision of the Court of Appeals is affirmed and the case is remanded to the circuit court.

ROBERTS, J., concurring in part, dissenting in part.

I concur with the majority's analysis under the state constitution that Article I, section 8 provides no greater protection to media defendants as compared to other defendants. I also agree that Wadsworth is not a "public figure" for purposes of the federal constitutional analysis. I dissent, however, with regard to the Bank of Oregon. The bank meets the requirements of a "public figure" as that term has developed in federal dafamation jurisprudence.

In Coronada Credit Union v. KOAT Television, 99 NM 233, 656 P2d 896 (1982), the credit union was found to be a public figure because it was chartered by law to serve members of the public, it was regulated by state and federal law, and its financial condition, the topic around which the defamation centered, was a matter of concern to the public. Coronado relied on a discussion of a corporation's status in the context of defamation by Sack, Libel, Slander, and Related Problems @ V. 3.1.9. at 208 (1980):

"It seems clear * * * that any publicly held corporation is a 'public figure' for purposes of commentary about its corporate affairs. When a corporation 'goes public' by publicly offering its securities, it has taken a specific, voluntary action, the known result of which will be mandatory increased public scrutiny. The necessary consequence is publicity. "It is consistent with both First Amendment policy and the aims of federal and state securities laws for commentary about such corporations to be encouraged and protected. Corporations subject to regulation by state or federal authorities are similarly 'public,' again inviting public scrutiny by voluntarily entering such businesses. And corporations that have the requisite level of dealings with government agencies may be 'public figures' for that reason alone. (Emphasis in original.) (Footnotes omitted.)….

BANK OF OREGON v. INDEPENDENT NEWS,

298 Ore. 434; 693 P.2d 35; 1985 Ore. LEXIS 927; 11 Media L. Rep. 1313 (Ore., 1985)