Holtzscheiter v. Thomson Newspapers, Inc. , 332 S.C. 502 ( 1998 )

FINNEY, Chief Justice:

This is a libel case in which respondent, a private individual, sued appellant, a newspaper, for publishing a statement on a matter of public interest which allegedly defamed respondent. The jury awarded respondent $500,000 actual damages and $1.5 million punitive damages. The trial judge remitted the punitive damage award to $500,000. The newspaper appeals. We reverse the trial judge’s refusal to direct a verdict on punitive damages, and remand for a new trial absolute.

This is the second trial and appeal in this matter. See Holtzscheiter v. Thomson Newspapers, Inc., 306 S.C. 297, 411 S.E.2d 664 (1991) (Holtzscheiter I). We have granted the newspaper’s petition to argue against the precedents of Holtzscheiter I and six other cases.¹ We took this unusual step because we are cognizant of the confusion generated by Holtzscheiter I’s majority and dissenting opinions, and of the need to reconsider many of our defamation cases in light of changing constitutional principles. While we do not overrule these cases outright, we caution the bench and bar that this area of the law is constantly evolving, and consequently all prior decisions must be read in the context of the current state of the law.

FACTS

Respondent’s seventeen year old daughter (Shannon) was murdered. The morning after her body was found the newspaper ran a story which, among other things, quoted Shannon’s doctor as saying “... there simply was no family support to encourage [Shannon] to continue her education.” Respondent alleges this phrase defamed her.

The doctor testified she told the newspaper’s reporter that Shannon lacked financial (not family) support to continue her education. There was circumstantial evidence that the paper did not follow its ordinary procedures in the filing and editing of this story in that the jury could have found no one other than the reporter read the entire story pre-publication. In addition, there was evidence that respondent had encouraged Shannon, a high school drop-out, to pursue her G.E.D. in the future.

COMMON LAW DEFAMATION

The tort of defamation allows a plaintiff to recover for injury to her reputation as the result of the defendant’s communication to others of a false message about the plaintiff. Slander is a spoken defamation while libel is a written defamation or one accomplished by actions or conduct. See Wilhoit v. WCSC, Inc., 293 S.C. 34, 358 S.E.2d 397 (Ct.App.1987) (television broadcast of photo is libel). The statement at issue here is in the form of libel.

The defamatory meaning of a message or statement may be obvious on the face of the statement, in which case the statement is defamatory per se. An example of defamation per se is “A is a thief.” If the defamatory meaning is not clear unless the hearer knows facts or circumstances not contained in the statement itself, then the statement is defamatory per quod. In cases involving defamation per quod, the plaintiff must introduce facts extrinsic to the statement itself in order to prove a defamatory meaning. An example of defamation per quod is “A had a baby” where the extrinsic fact is that A is unmarried. See Capps v. Watts, 271 S.C. 276, 246 S.E.2d 606 (1978).

Whether the majority in Holtzscheiter I held the phrase “There was simply no family support to encourage [Shannon] to continue her education” was defamatory per quod or defamatory per se is unclear. Citing Nettles v. MacMillan Petroleum Corp., 210 S.C. 200, 42 S.E.2d 57 (1947), the majority held that because the words used were ambiguous, respondent could introduce evidence of how the phrase was understood. The passage from Nettles that precedes this holding is a discussion of defamation per quod which addresses the admissibility of extrinsic facts and of evidence of how the words were understood. It would therefore appear Holtzscheiter I’s majority held this case involved defamation per quod. The holding, however, is obscured by footnote 5, which asserts the evidence is not “necessary to supply a defamatory meaning, but would merely explain whether readers, in fact, interpreted the article to convey a libelous meaning on its face.” The Holtzscheiter I dissent understood the majority to hold that the statement was defamatory per se, not per quod, and criticized this holding. Commentators also appear confused about Holtzscheiter I’s holding on this issue. Compare Hubbard and Felix The South Carolina Law of Torts 157 (Supp. 1993) (interpreting Holtzscheiter I to hold the “statement ... could be read as defamatory without resort to extrinsic facts ... i.e., defamatory per se”) with 20 S.C.Juris. Libel and Slander § 3, p. 104, fn. 15 (1993) (interpreting Holtzscheiter I to hold the statement was defamatory per quod). We now clarify Holtzscheiter P. the statement is defamatory per quod. Hence, extrinsic evidence is necessary to prove the defamatory meaning.

Much confusion arises from defamation law’s use of the term “per se” in two different senses. As noted above, there is the question whether the statement is defamatory per se or per quod. A separate issue is whether the statement is “actionable per se” or not.² This issue is one of pleading and proof, and is always a question of law for the court. If a defamation is actionable per se, then under common law principles the law presumes the defendant acted with common law malice³ and that the plaintiff suffered general damages. If a defamation is not actionable per se, then at common law the plaintiff must plead and prove common law actual malice and special damages.⁴ Capps v. Watts, supra; Lily v. Belk’s Dep’t Store, 178 S.C. 278, 182 S.E. 889 (1935).

Further, in assessing the question of actionable per se or not, an important distinction is drawn between defamation in the form of libel and that in the form of slander. Libel is actionable per se if it involves “written or printed words which tend to degrade a person, that is, to reduce his character or reputation in the estimation of his friends or acquaintances, or the public, or to disgrace him, or to render him odious, contemptible, or ridiculous.... ” Lesesne v. Willingham, 83 F.Supp. 918, 921 (E.D.S.C.1949). In other words, if the trial judge can legally presume, because of the nature of the statement, that the plaintiffs reputation was hurt as a consequence of its publication, then the libel is actionable per se. Capps v. Watts, supra. Essentially, all libel is actionable per se. The statement at issue here is in the form of libel and, accordingly, Holtzscheiter I held it was actionable per se,⁵ that is, without pleading or proof of special damages.⁶

In contrast to libel, slander is actionable per se only if it charges the plaintiff with one of five types of acts or characteristics: (1) commission of a crime of moral turpitude; (2) contraction of a loathsome disease; (3) adultery; (4) unchastity; or (5) unfitness in one’s business or profession. Lesesne, supra; Galloway v. Cox, 172 S.C. 101, 172 S.E. 761 (1934). While some states limit actionable per se libel to the same categories of slander which are actionable per se, this is not the law in South Carolina. See, e.g., Hubbard and Felix The South Carolina Law of Torts 402 (1990). To the extent Holtzscheiter I may be read to impose this limitation on actionable per se libel, it is overruled.

Under common law principles, it is presumed respondent suffered general damages and that the newspaper acted with common law actual malice because this case involves libel, which is actionable per se. Further, since the law of the case under Holtzscheiter I is that the phrase is defamatory per quod, the respondent is entitled to introduce extrinsic evidence to prove the phrase’s defamatory meaning.

CONSTITUTIONAL ISSUES

This case involves a claim for general and punitive damages by a private plaintiff against a media defendant in a matter of public interest.⁷ Accordingly, the case has constitutional implications and issues. We note that constitutional issues were neither raised nor ruled on at the trial level in Holtzscheiter I because the newspaper prevailed at the directed verdict stage on common law issues alone. Despite the fact constitutional issues were not before the Court in the first appeal, the dissent engaged in a discussion of them. The unfortunate consequence of this discussion was confusion at the second trial whether the majority’s silence on the constitutional issues was an implicit rejection of the dissent’s view, and therefore whether certain constitutional issues were foreclosed at the second trial on law of the case grounds, having been implicitly litigated in Holtzscheiter I. As we view the record in this second trial, the parties and trial judge felt they were bound by the law of the case, and thus certain constitutional issues were not fully litigated. This erroneous, though understandable, confusion permeated the second trial. We therefore take this opportunity to discuss the constitutional questions implicated by this case.

At common law, defamation was a “strict liability” tort, but where the constitution is involved, the common law rules are altered. For example, since respondent relied on the newspaper’s negligence here to establish liability, the constitution requires she prove “actual injury”: She may not rely on the common law presumption of general damages⁸ arising from a defamation actionable per se. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). In addition, respondent may not constitutionally rely on the common law presumption that the statement was false. Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 106 S.Ct. 1558, 89 L.Ed.2d 783 (1986); Parker v. Evening Post, 317 S.C. 236, 452 S.E.2d 640 (Ct.App.1994). Finally, in order to recover punitive damages from the newspaper, respondent must prove by clear and convincing evidence that the paper acted with constitutional actual malice, that is, that the paper either realized the statement was false or had serious reservations about its truth.⁹ Gertz, supra; Deloach v. Beaufort Gazette, 281 S.C. 474, 316 S.E.2d 139 (1984).

With these considerations in mind, we turn to the issues in this appeal.

ISSUES

A. Directed Verdict on Liability

The newspaper asserts it was entitled to a directed verdict on liability for several different reasons. We disagree.

A directed verdict on liability is properly denied where there is any evidence, direct or circumstantial, justifying submission of the issue to the jury. Washington v. Whitaker, 317 S.C. 108, 451 S.E.2d 894 (1994).

The newspaper contends it was entitled to a directed verdict because the allegedly libelous statement was a constitutionally protected expression of fact or opinion,¹⁰ or because it was a fair comment on a matter of public interest. See Oswalt v. State-Record Co., 250 S.C. 429, 158 S.E.2d 204 (1967). Neither of these issues were raised below, and may not properly be raised now on appeal. Beaufort County v. Butler, 316 S.C. 465, 451 S.E.2d 386 (1994). The paper next contends it was entitled to a directed verdict because respondent failed to meet her burden of proving the statement false, Hepps, supra, and because the published statement was substantially true. See, e.g., Dauterman v. State-Record Co., 249 S.C. 512, 154 S.E.2d 919 (1967). Neither issue was raised below and accordingly is not preserved for our review. Butler, supra. We note that at this second trial, in fact, the paper expressly waived reliance on substantial truth, apparently believing the issue foreclosed by the decision in the first appeal. While the dissent discussed that issue, it was not properly before the Court in that appeal, and therefore, like the other constitutional issues, may be litigated in any subsequent proceeding.

Similarly, the paper argues it was entitled to a directed verdict because respondent failed to produce any evidence of damage to her reputation. The trial court relied on the common law presumption of general damages, and the newspaper failed to raise a constitutional challenge to this presumption.¹¹ Accordingly, it has not demonstrated reversible error in the trial court’s denial of the directed verdict motion on this ground. Washington v. Whitaker, supra, (constitutional issues may not first be raised on appeal); Butler, supra.

The newspaper also asserts it was entitled to a directed verdict because respondent, Shannon’s mother, failed to prove the statement that Shannon lacked family support was “of and about her.” Kendrick v. Citizens & Southern Nat’l Bank, 266 S.C. 450, 223 S.E.2d 866 (1976). While the general rule is that defamation of a group does not allow an individual member of that group to maintain an action, this rule is not applicable to a small group. 50 Am.Jur.2d, Libel and Slander § 349 (1995); Hospital Care Corp. v. Commercial Casualty Ins. Co., 194 S.C. 370, 9 S.E.2d 796 (1940) (defamation of a class not actionable by member unless statement has special and personal application to plaintiff). We hold there was evidence from which a jury could have found the statement was “of and about” respondent and thus the directed verdict motion was properly denied. Washington v. Whitaker, supra; Hospital Care, supra.

Finally, the newspaper argues the absence of evidence that it acted negligently in reporting the statement entitles it to a directed verdict. We find some indirect evidence in the record that the newspaper failed to follow its professional standards in this matter. By comparing the inconsistencies in times and sequences of events related by the paper’s own witnesses, the jury could have found professional standards were breached in that no one other than the reporter actually read the story before it was published. This was some evidence of negligence, sufficient to deny the newspaper’s directed verdict motion. See Jones v. Sun Publishing Co., 278 S.C. 12, 292 S.E.2d 23 (1982) (private plaintiff need show only some measure of legal fault by publisher to withstand directed verdict motion).

We find no reversible error on this record in the trial judge’s denial of the newspaper’s directed verdict motion on liability.

B. Punitive Damages

The newspaper contends the trial judge erred in denying its directed verdict motion on the issue of punitive damages. We agree.

In order to withstand the directed verdict motion on the issue of punitive damages, respondent had to present clear and convincing evidence that the newspaper acted with constitutional actual malice. Gertz, supra; Deloach, supra. We are required to review the evidence of constitutional actual malice de novo pursuant to the United States Supreme Court’s decision in Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984); Miller v. City of West Columbia, 322 S.C. 224, 471 S.E.2d 683 (1996). We find absolutely no evidence the newspaper either knew the statement was false or had serious reservations about its truthfulness when the article was prepared and published. Accordingly, the directed verdict motion should have been granted. Gertz, supra; Deloach, supra.

The paper also contends that the punitive damage award was so excessive as to indicate passion, prejudice or caprice on the part of the jury. It therefore argues that the remedy for the punitive damage error must be a new trial absolute. See Sanders v. Prince, 304 S.C. 236, 403 S.E.2d 640 (1991). We agree that the proper relief in this case is a new trial absolute, not simply because the issue of punitive damages should never have been submitted to the jury, nor solely because of the size of the award, but also because the parties were denied a fair trial as the result of the confusion generated by our decision in Holtzscheiter I. Accordingly, the judgment below is

REVERSED AND REMANDED.

C. TOLBERT GOOLSBY, Jr., Acting Associate Justice, concurs. TOAL, J., concurring in result in a separate opinion. A. LEE CHANDLER, Acting Associate Justice, and MOORE, J., dissenting in part in a separate opinion.

1 . Capps v. Watts, 271 S.C. 276, 246 S.E.2d 606 (1978); Jones v. Garner, 250 S.C. 479, 158 S.E.2d 909 (1968); Whitaker v. Sherbrook Distributing Co., 189 S.C. 243, 200 S.E. 848 (1939); Merritt v. Great Atlantic & Pacific Tea Co., 179 S.C. 474, 184 S.E. 145 (1936); Wilhoit v. WCSC, Inc., 293 S.C. 34, 358 S.E.2d 397 (Ct.App.1987); and Manley v. Manley, 291 S.C. 325, 353 S.E.2d 312 (Ct.App.1987).

2 . We strongly discourage use of the term actionable per quod and instead suggest the issue be posed as "actionable per se" or "not actionable per se.”

3 . When a publication is actionable per se there arises a common law presumption of implied malice, sometimes called "malice in law”, "legal malice” or "presumed malice” which substitutes for common law actual malice. If the defamation is not actionable per se, then the plaintiff must plead and prove common law actual malice, that is "the defendant was activated by ill will in what he did, with the design to causelessly and wantonly injure the plaintiff; or that the statements were published with such recklessness as to show a conscious indifference toward plaintiff’s reports.” Jones v. Garner, supra.

4 . General damages include such things as injury to reputation, mental suffering, hurt feelings, and other similar types of injuries which are "incapable of definite money valuation.” Whitaker v. Sherbrook Distributing Co., supra. On the other hand, special damages are tangible losses or injury to the plaintiff's property, business, occupation or profession, capable of being assessed monetarily, which result from injury to the plaintiff’s reputation. Capps v. Watts, supra; Wardlaw v. Peck, 282 S.C. 199, 318 S.E.2d270 (Ct.App.1984).

5 . The majority labeled the statement "libel per se” rather than "actionable per se" in determining this issue. This language has led to confusion, especially since it is preceded by a passage from Prosser on Torts (also cited in Capps v. Watts, supra) discussing a limitation on the actionability per se of libel which is not the law in South Carolina. See, e.g., Lesesne v. Willingham, 83 F.Supp. 918 (E.D.S.C.1949).

6 . We note that in Holtzscheiter I the Court was not presented with any issue concerning the presumption of common law actual malice.

7 . The parties characterize the case this way, and we accept their view. Contra Holtzscheiter I, Toal, A.J., dissenting (finding this a matter of private concern).

8 . See footnote 4, supra, for a discussion of the difference between common law general damages and special damages. Where a plaintiff in a constitutional defamation case relies on conduct less than constitutional malice, she may not rely on presumed damages but must demonstrate "actual injury”. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). Actual injury means not only out-of-pocket losses, but includes injury to reputation, mental suffering and anguish, and personal humiliation. Gertz, supra.

9 . While common law malice involves a malicious intent or recklessness on the part of the publisher, constitutional malice requires actual knowledge of the publication’s falsity or serious reservations about its truthfulness. See Gertz, supra. The presumption of common law actual malice cannot substitute for the requirement of proof of constitutional actual malice in a case where the First Amendment is involved. See, e.g., Sanders v. Prince, 304 S.C. 236, 403 S.E.2d 640 (1991).

10 . But see Milkovich v. Lorain Journal Co., 497 U.S. 1, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990) (no separate constitutional protection for opinion).

11 . Therefore we do not reach the question whether respondent presented sufficient evidence of "actual” damages within the meaning of Gertz to withstand the directed verdict motion.