Brown & Williamson Tobacco Corp. v. Jacobson
1986 U.S. Dist. LEXIS 21762, 644 F. Supp. 1240, 13 Media L. Rep. (BNA) 1263 (1986)
Rule of Law:
A public figure corporate plaintiff in a libel action must prove actual malice by clear and convincing evidence to recover; however, while punitive damages may be awarded based on actual malice, substantial compensatory damages require proof of actual financial injury.
Facts:
- In 1975, an advertising agency hired a market-research firm to develop a strategy for Viceroy cigarettes, a brand owned by Brown & Williamson (B & W).
- The research firm submitted a report suggesting a strategy to attract young 'starters' by associating smoking with 'illicit pleasure' such as marijuana, wine, beer, and sex.
- B & W explicitly rejected this 'illicit pleasure' strategy and subsequently fired the advertising agency.
- In 1981, the Federal Trade Commission (FTC) published a staff report referencing the 1975 research but noting that B & W had adopted 'many' ideas, though not necessarily the specific illicit pleasure concepts.
- Walter Jacobson, a commentator for CBS, prepared a 'Perspective' broadcast regarding the tobacco industry during a 'sweeps' ratings period.
- Prior to the broadcast, B & W informed Jacobson's researcher that they had rejected the 'illicit pleasure' strategy, and the researcher failed to find any Viceroy ads utilizing such themes.
- Jacobson proceeded to broadcast a segment accusing Viceroy of currently using a strategy to hook children using pot, wine, beer, and sex, stating, 'They’re not slicksters, they’re liars.'
- Following the broadcast, Jacobson's researcher destroyed his script drafts and research notes.
Procedural Posture:
- Brown & Williamson sued Jacobson and CBS for libel in the United States District Court for the Northern District of Illinois.
- The District Court initially dismissed the complaint.
- B & W appealed the dismissal to the U.S. Court of Appeals for the Seventh Circuit.
- The Seventh Circuit reversed the dismissal and remanded the case for trial.
- The case was tried before a jury in the District Court.
- The jury returned a verdict in favor of B & W, awarding $3 million in compensatory damages and $2.05 million in punitive damages.
- Defendants filed motions for judgment notwithstanding the verdict, a new trial, or remittitur.
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Issue:
Does the First Amendment protect a news broadcaster from libel liability for accusing a corporation of immoral conduct when the broadcaster possessed evidence contradicting the accusation, and can a corporate plaintiff recover substantial compensatory damages without proving actual economic loss?
Opinions:
Majority - Judge Hart
No, regarding the liability protection, but Yes, regarding the requirement for proving actual damages. The court denied the defendants' motion for judgment notwithstanding the verdict on liability but granted it regarding compensatory damages. The court found clear and convincing evidence of actual malice, noting that the researcher destroyed documents, which permits an inference of bad faith. Furthermore, the defendants knew B & W had denied the strategy and could find no advertisements to corroborate their claims, yet broadcast the accusation during 'sweeps week' to boost ratings. The court ruled that the statement 'they're liars' was a fact capable of verification, not protected opinion. However, regarding damages, the court held that while general damages are presumed in libel per se, substantial compensatory damages require proof of actual injury. Since B & W failed to prove lost sales, customers, or profits, the $3 million compensatory award was reduced to $1 nominal damages. The $2.05 million punitive damage award was upheld because the defendants' conduct was willful and wanton.
Analysis:
This decision illustrates the complex burden placed on corporate public figures in defamation litigation. While the court upheld the difficult 'actual malice' standard—finding that the destruction of notes and the decision to ignore contradictory evidence were sufficient proof—it strictly limited financial recovery. The ruling establishes that even in cases of libel per se, where reputational harm is theoretically presumed, corporate plaintiffs cannot recover large compensatory sums without 'receipts' showing actual economic loss. However, the decision is significant for affirming that punitive damages can stand independently of substantial compensatory damages if the defendant's conduct is sufficiently malicious, serving as a deterrent against media recklessness.
