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MARTIN MARIETTA CORP. v. EVENING STAR NEWSPAPER CO

July 26, 1976

MARTIN MARIETTA CORPORATION, Plaintiff,
v.
THE EVENING STAR NEWSPAPER COMPANY, et al., Defendants


Flannery


The opinion of the court was delivered by: FLANNERY

This libel action arises from an article written by defendant Peter Gruenstein, copyrighted and distributed by defendant Capitol Hill News Service (CHNS), and published by defendant Evening Star Newspaper Company (Star) in the Washington Star. The article appeared in all four editions of the Star printed on October 31, 1975. Plaintiff Martin Marietta Corporation filed a complaint on November 4, 1975, requesting $5,000,000 in compensatory damages, $10,000,000 in punitive damages, and an injunction requiring the Star to print a retraction admitting the falsity of the article. The matter is now before the court on defendant Star's motion for summary judgment. The court, finding no genuine issue to exist as to any material fact, and finding that defendant is entitled to judgment as a matter of law, will grant the motion. Further, the court has determined that there is no just reason for delay in the entry of this judgment, and, consequently, will order the clerk to place it on the docket forthwith. The entry of the judgment will render moot the Star's pending motion for a protective order and plaintiff's pending request for a hearing to schedule discovery.

 I

 Facts

 The article giving rise to this action, which is attached as Appendix A to this memorandum, appeared on the front page of the Star under the headline, "A Contractor's Stag Party for Boys at the Pentagon." The story, copyrighted by CHNS and attributed to Peter Gruenstein, stated that a weekend party for a soon to be married "top Air Force official" was held in January 1968 at a Wye Island, Maryland hunting lodge leased by plaintiff. Approximately one third of the 40 to 50 guests at the lodge were "Defense Department personnel," according to the article. The article also stated that two prostitutes attended the party and that one was paid $3,000 for her services "by a Martin Marietta representative." One of the prostitutes "reportedly swung naked from the antlers of an animal head mounted on one of the lodge's walls."

 In addition to the above allegations, variously attributed to "sources" and "guests", the article included a disclaimer attributed to Martin Marietta Vice-President for Public Relations Roy Calvin. According to the story,

 
A Martin Marietta spokesman said: "We don't find any record that any Martin employees were present or involved in the arrangement.
 
"My impression was it (the party) was at least two years after we had any connection" with the lodge. . . .

 The story also alluded to a statement by then Defense Secretary James R. Schlesinger that activities such as those described were commonplace in the defense industry and to statements by a McDonnell Douglas employee that the industry has, in some cases, procured prostitutes for military officials. Finally, the article mentions that similar allegations have been made about other defense contractors and that Capitol Hill News Service had, in previous articles reported that Northrop Corporation, Rockwell, and Raytheon Company, all defense contractors, had entertained Pentagon officials with hunting trips in Maryland. The Star paid CHNS $200 for the story.

 Entertainment of military officials by defense contractors, including Martin Marietta, has been a topic of public debate for several years. The problem was considered quite serious by President Johnson, who, on May 11, 1965, signed Executive Order 11222, forbidding government employees from accepting entertainment or other similar benefits from persons seeking to establish financial relationships with the government. The Order is implemented by Department of Defense Directive 5500.7, 32 C.F.R. ยง 40.5 (1975). The entertainment activities of the Martin Company, which consolidated with the American Marietta Company in 1961, were the subject of hearings held in 1959 by the Subcommittee for Special Investigations of the House of Representatives Committee on Armed Services.

 In the weeks immediately preceding publication of the article, plaintiff's name began to appear with increasing frequency in connection with disclosures concerning entertainment of military officials by Northrop Corporation. The disclosures about Northrop prompted Representative Wright Patman to announce on October 14, 1975, that the Joint Committee on Defense Production would investigate recent reports that defense officials had accepted favors and gratuities from defense contractors, who subsequently charged some of those costs to overhead on their government contracts, the Washington Post to report on October 16, 1975 that FBI agents and the Justice Department had commenced investigations of Northrop's conduct, Senator Proxmire to issue a press release on October 16, 1975, criticizing the Defense Department's investigation of Northrop as a "whitewash," and the New York Times to report on October 18, 1975 that Defense Secretary Schlesinger had ordered an inquiry into the entertainment of Defense Department officials by defense contractors.

 On October 22, 1975, the Star published an article written by Peter Gruenstein and distributed by CHNS entitled "3 Other Firms Entertained VIP's." The article stated that Rockwell International Corporation, Raytheon, and Martin Marietta used hunting facilities in Maryland to entertain Defense Department officials and members of Congress. Between October 22 and October 27 at least thirteen newspapers across the country carried versions of this story, attributed to CHNS, and each version mentioned Martin Marietta. The October 22 article was the twelfth in a series on defense contractor entertainment activities written by Gruenstein, distributed by CHNS, and printed by the Star. The first article in the series, which focused primarily on Northrop Corporation, appeared on May 8, 1975.

 An article by William H. Jones on the Congressional investigation of the relationship between defense contractors and the Pentagon was published in the Washington Post on October 23, 1975. According to the article, congressional investigators related that at least five of the largest defense contractors maintain hunting and fishing lodges for use by Defense Department officials or arrange hunting vacations for these officials. Further, the investigators were said to have named Martin Marietta as one of the firms known to have entertained military officials at an Eastern Shore hunting lodge. Numerous papers across the country printed versions of the Jones article, all mentioning Martin Marietta, on October 22, 23, and 24.

 On October 23, 1975, an article by Robert Lenzner in the Boston Globe, entitled "Raytheon Co. admits 'trips' for US officials," detailed congressional staff allegations against Raytheon and the company's response. In addition, the article mentioned Martin Marietta as one of the companies under investigation for similar conduct.

 Clark Mollenhoff wrote an article for the October 24 Des Moines Register entitled "GAO to Probe Defense Firm Hospitality." The story reported that Senator Proxmire had requested the General Accounting Office to investigate the entertainment practices of several defense contractors, specifically including Martin Marietta. On October 25, 1975, many newspapers carried stories about the Proxmire request and made references to plaintiff. An Associated Press story appearing on October 26 and 27 also referred to Proxmire's request that Martin Marietta be investigated, although the focus of the story was a report that Admiral Harold E. Shear used Northrop hunting lodge facilities.

 The Washington Post of October 28, 1975, published an article entitled "Goose Guide Shrugs at Northrop 'Fuss'," by Karen De Young. The article described the reaction of a goose guide and Eastern Shore residents to news reports of defense contractor entertaining at hunting lodges in the area and mentioned Martin Marietta as one of the companies reported to have sponsored hunting trips for government officials. Between October 28 and October 30 various versions of the article appeared in numerous papers.

 Martin Marietta's business status as of October 1975 reinforced its association with the topic of entertainment in the defense industry. The corporation was the 20th largest defense contractor in fiscal year 1975, receiving $320.3 million in public funds from defense contracts. In furtherance of its business interests, Martin Marietta regularly provided uniformed officers and Defense Department officials with free transportation on company aircraft and free access to the hunting facilities at Wye Island. In addition, the company regularly participated in advisory panels, technical exchange programs, and private defense and aerospace related organizations.

 Against this backdrop, preparation of the October 31 article began. Undisputed portions of the record amassed in the instant case reveal that the following Star employees, and only the following Star employees, played a direct role in the publication of the article: Editor James Bellows, Managing Editor Sidney Epstein, National Editor Barbara Cohen, *fn1" and Ross Evans, a National Desk Editor. Author Gruenstein was not employed by the Star, but by CHNS at the time he prepared the article. CHNS, a nonprofit corporation chartered in 1974, operated as an independent news service, supplying its regular subscribers with daily stories concerning activities in Washington, D.C. In addition, CHNS regularly contacted the Washington offices of the Star, the Detroit News, the Saint Louis Post Dispatch, the Los Angeles Times, and the Des Moines Register-Tribune to ascertain whether these non-subscribers would be interested in buying specific pieces prepared for general distribution to regular customers. *fn2" Prior to October 31, 1975, the Star had purchased 14 articles from CHNS, including the 12 in the defense contractor series, for fees ranging from $50 to $150.

 The Star first learned that Gruenstein was working on the story which eventually became the allegedly libelous article on October 24, 1975. On this date, Gruenstein spoke with Barbara Cohen, the editor who had handled the previous 12 articles in the defense contractor series, and informed her that he was following some leads concerning the providing of prostitutes for Defense Department personnel. Cohen informed Gruenstein that the Star would be interested in using the article if it was specific in its allegations. Cohen also granted Gruenstein's request for use of the Star's "morgue" in preparing the story.

 Cohen next heard from Gruenstein on October 27 or 28, when he informed her that he was nearing the conclusion of his investigation and might have an article ready to go by the end of the week. She, in turn, mentioned the possibility that a story by Gruenstein on defense contractors and prostitutes might be available for the weekend editions of the Star at the weekly editors meeting held on Tuesday, October 28. Editor James Bellows indicated that, if the article panned out, it was a likely candidate for publication.

 Gruenstein actually delivered the article on Thursday, October 30. *fn3" In addition to providing the Star with the article on that day, CHNS sent it to all its subscribers and to the Detroit News, which had expressed an interest in the story. The St. Louis Post Dispatch similarly received the story on October 30 or 31. *fn4"

 After reading the article several times, Cohen called Gruenstein to discuss its accuracy. During the course of the discussion, Gruenstein affirmatively vouched for the reliability of his sources, the date of the party, the payment to the prostitute, the nature of the Martin Marietta denial, Martin Marietta's lease of the lodge, the care of his investigation, and the general use of prostitutes by defense contractors. Gruenstein also stated that he had personally spoken with the three guests mentioned in the second paragraph of the article. The only detail Gruenstein could not support unequivocally was the type of animal head from which the prostitute swung and Cohen stated that she was going to substitute "stuffed animal head" for "moose head" to alleviate any possibility of error.

 Following her conversation with Gruenstein, Cohen changed the moose head reference and deleted paragraphs seven and eight. These paragraphs, describing the rental of another hunting lodge by Martin Marietta, did not relate to the stag party episode and were considered irrelevant. After consultation with Bellows, Cohen deleted a portion of paragraph fifteen *fn6" and made certain other stylistic alterations. Cohen then left the article with Ross Evans, instructing him to check with Gruenstein the accuracy of a modifying phrase she had added and to implement a Bellows suggestion that a good description of the regulations pertaining to entertainment of Defense Department personnel be inserted early in the article. Evans performed these tasks that evening.

 Bellows arrived at the Star early in the morning on October 31 to perform his usual tasks of preparing the promotion blurbs for the top of the front page. He and Epstein had agreed the preceding afternoon that if the Gruenstein article was ready, it would run on the front page of the October 31 paper. Finding the story on page one of the planned first edition, Bellows prepared the promotion blurb "Stag Parties Attended by Pentagon Officials." *fn7" The story then ran in the first and second editions.

 At approximately twelve noon on the 31st George Bunker, Chairman of the Board of Martin Marietta, telephoned Epstein, a personal friend, and objected to the Gruenstein article. Although there is conflicting deposition testimony by the principals as to certain aspects of the conversation, both agree that Bunker informed Epstein that the entire article was false, that a libel suit was being considered, and that employees of Martin Marietta would not do business in the fashion reported by Gruenstein. Epstein recalls Bunker to have added, after his denial, that if he ever found out that Martin Marietta employees were involved with the party he would fire several hundred of them. Bunker claims that in response to an initial statement that the article was incorrect, Epstein stated that there may be some problem with the date but that the rest of the story was correct. Bunker then claims to have answered that it was not just the date, but the whole story was wrong.

 At the time Bunker phoned Epstein, two editions of the Star had not yet been printed. The press run for the third edition began at 1:00 p.m. and the run for the fourth began at 2:45 p.m. The Star maintains that under its printing procedures, substantive changes could not have been made after 12:00 noon and 1:30 p.m. for each edition, respectively. In the face of Bunker's call and the impending deadlines, Epstein contacted Cohen and asked whether she still believed in the article. Upon learning that Bunker's objections were general, rather than specific, and apparently based on second-hand information, she expressed continuing confidence in the story. Epstein then decided not to kill the article in the remaining editions. This decision was concurred in by Bellows and Robert Nelson, house counsel.

 Plaintiff filed this action on November 4, 1975. It simultaneously issued a press release announcing the event. Several papers, including the Star, carried the release.

 II

 Applicability of the Malice Standard

 Recent decisions by the Supreme Court have established that mass media defendants, such as the Star, enjoy a conditional constitutional immunity from liability for publication of defamatory falsehoods. In New York Times Co. v. Sullivan, 376 U.S. 254, 11 L. Ed. 2d 686, 84 S. Ct. 710 (1964), the Court held that the first amendment provides the press with special protection from libel actions brought by public officials. In order to preserve the press' freedom to engage in uninhibited discussion of public issues, the Court ruled that a newspaper could not be held liable for a false story about a public official unless the plaintiff proved with "convincing clarity" that the publication was made with "actual malice." Id. at 279-80, 285-86. Shortly thereafter, in Curtis Publishing Co. v. Butts, 388 U.S. 130, 18 L. Ed. 2d 1094, 87 S. Ct. 1975 (1967), the Court found that the protection provided in New York Times extended to cases brought by "public figures." Id. at 155. In Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 29 L. Ed. 2d 296, 91 S. Ct. 1811 (1971), a plurality determined that the privilege applied where the publication concerned matters of general or public interest, regardless of the plaintiff's status. Id. at 43 (Brennan, J.). The majority opinion in Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L. Ed. 2d 789, 94 S. Ct. 2997 (1974), indicated that the general rule announced in Metromedia was inappropriate for those cases where the reputations of natural persons were placed in jeopardy. When a natural person brings a libel suit, the court held, the malice standard of New York Times does not apply unless the plaintiff is a public figure for the range of issues discussed in the allegedly defamatory statement. Id. at 343, 345-46. As is more fully explained below, the court finds that where a libel action is brought by a corporation, the rule announced in Metromedia remains the proper standard for determining the applicability of the New York Times malice standard.

 Viewing the instant record in the light most favorable to plaintiff, the court concludes that plaintiff must prove actual malice because all reasonable jurors would agree that the October 31 article discussed issues of legitimate public importance, or, in the alternative, because all reasonable jurors would agree that Martin Marietta Corporation is a public figure under the standard set out in Gertz v. Robert Welch, Inc., supra. The court has taken an especially hard look at the facts and attempted in all instances where plaintiff contends issues to exist to assess the genuineness of the conflict. The use of summary judgment to terminate litigation in this fashion prevents all but the strongest libel cases from proceeding to trial, thereby advancing the first amendment policy of shielding the press from harassment. Washington Post Co. v. Keogh, 125 U.S. App. D.C. 32, 365 F.2d 965, 968 (D.C. Cir. 1966), cert. denied, 385 U.S. 1011, 17 L. Ed. 2d 548, 87 S. Ct. 708 (1967); Buchanan v. Associated Press, 398 F. Supp. 1196 (D.D.C. 1975); see Wasserman v. Time, Inc., 138 U.S. App. D.C. 7, 424 F.2d 920, 922 (D.C. Cir. 1970) (Wright, J., concurring).

 A.

 Applicability to Corporate Plaintiffs

 Justice Brennan's position was rejected by a majority of the Court in Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L. Ed. 2d 789, 94 S. Ct. 2997 (1974), because it took into consideration only society's interest in having a press free from the shackles of self-censorship while failing to protect society's strong and legitimate interest in preserving the reputations of private individuals. Id. at 341; see Time, Inc. v. Firestone, 424 U.S. 448, 96 S. Ct. 958, 965, 47 L. Ed. 2d 154 (1976). It is quite clear from the Court's opinion, however, that the values considered important enough to merit accommodation with interests protected by the first amendment are associated solely with natural persons, and that corporations, while legal persons for some purposes, possess none of the attributes the Court sought to protect. Justice Powell's detailed explanation of the personal values deserving deference from the first amendment leaves no doubt that corporations must be excluded from the Gertz holding.

 
The legitimate state interest underlying the law of libel is the compensation of individuals for the harm inflicted on them by defamatory falsehood. We would not lightly require the State to abandon this purpose, for, as Mr. Justice Stewart has reminded ...

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