Lewis v. Reader's Digest Ass'n

No. 12389
I N THE SUPREME COURT O THE STATE OF M N A A
F OTN
1973
WADE V. LEWIS, SR., and ELKHORN
M I N I N G COMPANY, a Montana C o r p o r a t i o n ,
P l a i n t i f f and Respondent,
READER'S DIGEST ASSOCIATION I N C . ,
a C o r p o r a t i o n and t h e HEARST CORPORATION,
a Corporation,
Defendants and P e t i t i o n e r s .
ORIGINAL PROCEEDING :
Counsel o f Record:
For P e t i t i o n e r s :
Loble, P i c o t t e , Loble, Pauly 6 S t e r n h a g e n , Helena,
Montana.
P e t e r Pauly a r g u e d , Helena, Montana.
Gough, Booth, Shanahan and Johnson, Helena, Montana.
Ronald F. Waterman a r g u e d , Helena, Montana.
F o r Respondent:
Bolkovatz, Romine and B e l l , Helena, Montana.
John F. B e l l a r g u e d , Helena, Montana.
Submitted: May 29, 1973
Decided: JUL 18 1973
Filed: JUL181973
PER CURIAM:
This is an original declaratory judgment action filed
1 of the MonW&Rules of
upon certification to this
Court by the Hon. James F. Battin, the United States District
Judge presiding in Civil Action No. 2033 in the United States
District Court for the District of Montana, Butte Division,
entitled "Wade V. Lewis, Sr. and Elkhorn Mining Company, a
Montana corporation, Plaintiffs, vs. Reader's Digest Associa-
tion, Inc., a corporation, and The Hearst Corporation, a
corporation, Defendants." In that quit in federal court there
is a controlling question of Montana law as to which there is
a substantial ground for difference of opinion, adjudication
of which by this Court will materially advance ultimate termin-
ation of the federal litigation.
The question for determination, as stated by Judge at tin
in his Certificate of Facts and Issues is:
"In a libel action, does Montana adopt the 'single'
or 'multi' state publication rule for purposes
of determining the situs and time of the tort,
where the defendants accomplish a multi-state cir-
culation of their publication but other than such
circulation have no contacts with this state"?
The facts giving rise to this issue are set forth in
Judge Battin's Certification of Facts and Issues, which we will
summarize:
Plaintiff Lewis is a resident of Boulder, Montana. Plain-
tiff Elkhorn Mining Company operates a "health" mine located
near the City of Boulder, Jefferson County, Montana. The mine
is said to be a cure for sufferers of arthritis and other diseases.
In the August 1969 issue of Good Housekeeping, a pub-
lication of defendant Hearst Corporation, an article was printed,
entitled: "What You Should Know About Arthritis Quacks1'.
The article contained a paragraph reading:
"Promoters of quack 'cures1 have become unspeak-
ably bold. In Boulder, Montana, there is an
abandoned uranium mine whose glowing advertise-
ments lure thousands each year to soak up radon,
a radioactive gas in hopes of relieving their
pain. The AMA has called this type of treatment
not only useless, but potentially dangerous.
Nevertheless, when news accounts reported that
the famous heart-transplant pioneer, Dr. Christian
Barnard, had arthritis in his hands, the mine
owners actually sent him a brochure and invited
him to take the cure!"
The January 1970 issue of defendant Reader's Digest
magazine printed a condensed version of the Good Housekeeping
article. The third paragraph of that version was identical to
the paragraph set forth above.
The January 1970 issue of Reader's Digest was purchased
by or delivered to nearly one-half of the families residing in
Montana, and a substantial but unknown number of the August
1969 issue of Good Housekeeping was likewise so purchased or
delivered.
Contending they were libeled by publication and repub-
lication of the paragraph heretofore quoted, plaintiffs brought
suit for $30,575.83, "direct, immediate and provable damages";
and for $200,000 punitive and exemplary damages.
Both defendant Hearst Corporation and defendant Reader's
Digest Association, Inc. are incorporated in Delaware and each
has its principal office in the State of New York. Neither cor-
poration is qualified to do business in Montana nor has any
office in this state. The only contacts defendants have with
Montana are through subscription and wholesale distribution of
its magazines to individuals and local or independent national
distributors in Montana.
The August 1969 issue of Good Housekeeping containing
the alleged libelous paragraph was printed at Kokomo, Indiana.
The January 1970 issue of ~eaderkDigest, sold or distributed in
Montana, was printed at Dayton, Ohio.
Defendants have filed motions in the federal court
action to dismiss plaintiffs' libel action for lack of juris-
diction. The federal district court "is convinced that defend-
ants' jurisdictional motion will be disposed of only by the answer
of the Montana Supreme Court to the question" certified to it in
the instant proceeding. In certifying the question to this Court,
the federal district court stated the matter in this fashion:
"The question deals with whether or not the de-
fendants in this case are subject to the juris-
diction of [the Montana federal court] because
* * * The cause of action [is] * * * one which
arises out of, or results from the activities
of the defendant within the forum * * * ' Brecht
v. RMK-BRJ, 24 St. Reptr. 761, 763 (Dist. of
Mont., 1967); L. B. Reeder Contractors of Arizona
v. Higgins Industries, Inc., 265 ~ . 2 d
768 (9th
Cir. 1959); Rule 4 (e), Federal Rules of Civil
Procedure; and Rule 4B(1), Montana Rules of Civil
Procedure. If Montana follows what is defined
below as the multi-publication rule, the cause
of action in this case arose upon the arrival
and sale of the defendants' periodicals in Montana.
If, on the other hand, Montana follows what is
defined below as the single publication rule,
one cause of action arose upon the first publica-
tion or printing of the articles, and no other
cause of action can arise out of the publication
of the articles."
Whether Montana is to follow the single publication or
multi-publication rule is one of first impression in this state.
The United States District Court has set out a legal
definition of the two rules:
"Single Publication: 'A single publication
occurs in cases of multi-state circulation of
periodicals where the cause of action for libel
is absolutely complete at the time of the first
publication; subsequent appearances or distribu-
tion of the periodicals are of no consequence
whatsoever to the creation or existence of a
cause of action but are only relevant in comput-
ing damages.'
Insull v. New York, World Telegram Corporation,
273 F.2d 166, 171 (7th Cir. 1959) ."
"Multi-Publication: 'The multiple publication
rule is that each time a libelous article is
brought to the attention of a third person a new
publication has occurred; * * * each pub-
lication is a separate actionable tort; and
* * * each time a * * * magazine containing
libelous material is sold or distributed, a
new publication has occurred and a fresh
tort has been committed, which, defenses aside,
is actionable.'
HartmanJtv. Time, Inc., 166 F.2d 127, 132
(3rd Cir. 1947). "
The origin of the multi-publication rule is the common
law. The King v. Carlisle, 1 Chitty 451, 18 Eng. Common Law
Reports 248; The Duke of Brunswick v. Harmer, 14 Q.B. 185,
117 Eng. Rep. 75. This rule is the view of the American Law
Institute (Restatement, Torts, § 578, Comment b.) and there
are several United States jurisdictions in which it is still
the last word of the courts. Prosser, Law of Torts, 4th ed.
p. 769, footnote 91, cites Staub v. Van Benthuysen, 36 La. Ann.
467; Renfro Drug Co. v. Lawson, 138 Texas 434, 160 S.W.2d 246;
Louisville Press Co. v. ~ e $ b l l ~ ,
105 Ky. 365, 49 S.W. 15; Holden
v. American News Co., 52 F. Supp. 24, dismissed 144 F.2d 249;
Hartman v. American News Co., 69 F. Supp. 736, affirmed 171 F.2d
581. However, with the advent of mass printing and interstate
circulation of newspapers, magazines and periodicals, etc.,
some courts became increasingly concerned with problems such as
the multiplicity of actions and applioation of the statute of
limitations to libel actions. See: Ogden v, Association of
United States Army, 177 F. Supp. 498; Mattox v. News Syndicate
Co., 176 F.2d 897, cert. den. 338 U.S. 858, 94 L,Ed. 525, 70 S.Ct.
The single publication rule, which originated in New
York, as stated in 50 Am Jur.2d, Libel and Slander, § 153:
" * * * evolved as a practical means of pro-
tecting the forum against multiplicity of
suits and indefinite tolling of the statute
of limitations, and where a publication has
an impact in more than one state, a question
of conflict of laws arises as to whether
and to what extent the 'multiple publication'
rule or the 'single publication' rule governs."
Despite the numerical weight of authority following
the single publication rule, we consider it unsound. Conceived
as a judge-made rule to serve the interests of judicial admin-
istration and expediency, it nevertheless is wrong in principle
and in practice creates far graver problems than it solves.
The underlying purpose of libel laws is to furnish a
means of redress for defamation. Every person is entitled to
enjoy his reputation unimpaired by false and defamatory remarks.
An action for libel or slander is based upon a violation of this
right which exposes a person to hatred, contempt, ridicule, or
obloquy, or which causes him to be shunned or avoided, or which
has a tendency to injure him in his occupation. Section 64-201
et seq., R.C.M. 1947; 50 Am Jur 2d, Libel and Slander, S1.
In a libel action the interest protected is that of rep-
utation. Thus, before there can be tort liability the defama-
tion must have been communicated to someone other than the person
defamed. This element of communication is given the technical
name of "publication". Every sale or delivery of the defamatory
article is a distinct publication, causing injury to the defamed
person, and a separate basis for a cause of action. Prosser,
Law of Torts, 8113; 1 Harper and James, The Law of Torts, 85.15.
Where the publication has an impact in many states, as
in the present case, involving nationally circulated magazines,
a question arises concerning which state law governs. Applying
the usual conflict of laws rule governing torts, i.e. that the
law of the place of injury controls, presents practical diffi-
culties in actions involving a multi-state tort, since it is
very possible the plaintiff was "injured" in several states.
The single publication rule, however, does not solve this problem.
Hartmann v. Time, 166 F.2d 127; Anno. 58 ALR2d 650. Generally
in cases of multi-state libel, the greatest harm to a person's
reputation will occur in the state of domicile. To promote the
underlying purpose of libel laws some courts have seen fit to
apply the law of the plaintiff's domicile. This is a better
rule than that which would restrict the plaintiff to the place
of printing. Dale System, Inc. V. Time, Inc., 116 F. Supp. 527;
Fouts v. Fawcett Publications, 116 F. Supp. 535; Hazlitt v.
Fawcett Publications, 116 F. Supp. 538. This rule has the posi-
tive effect of restricting forum shopping by the plaintiff cited
as a problem with multi-publication rule. In addition, it would
prevent the publishing company from choosing as a place of print-
ing a state with favorable libel laws.
Another problem often confronted by the courts when apply-
ing the multi-publication rule is that of an indefinite tolling
of the statute of limitations. This evolves if it can be said
that every time the defamation is communicated to a third party
a separate cause of action arises. But a rule holding that the
period of limitation begins to run from the time of the first
printing may unduly leave the plaintiff unprotected. An unscrupu-
lous publisher might print a defamatory article about a Montanan
and distribute a few copies in New York; the plaintiff might well
feel that the time and expense involved would not warrant the
filing of an action; then after the period of limitation ends
the publisher could flood Montana and the rest of the country
with the article without fear of liability. See ~ominiakv,
National Enquirer, 439 Pa. 222, 266 A.2d 626. The single pub-
lication rule has not solved this problem nor has it set a spec-
ific time for the statute of limitations to begin running. Rath-
er, the courts have set forth various holdings differing from
state to state for the time the publication is said to begin.
Anno. 42 AIR3d 807.
The single publication rule has been used in several
states to set venue and jurisdiction at the place of printing.
If this rule were adopted as the law in this state the plain-
tiff, a Montana corporation, conducting its business solely
in this state, would be limited to maintaining its suit in
Kokomo, Indiana, or Dayton, Ohio, the jurisdiction where the
magazines were printed. The expense of bringing such suit
would effectively eliminate redress as a practical matter for
a plaintiff residing in a distant state such as Montana.
Defendants contend adoption of the multiple publication
rule would subject them to a multitude of suits in every state
and this will have a "chilling effect" upon the First Amendment's
freedom of the press. We have taken into account those consid-
erations. We remain unconvinced that adoption of the multi-
state publication rule will inhibit the zeal with which national
periodicals disseminate their ideas. We believe that any protec-
tion given the press under the First Amendment of the United
States Constitution must be balanced against a citizen's right
to protect his reputation and good name in the community in which
he resides against printing and publication of false defamatory
statements. Montana's new Constitution affirms this principle.
Art. 11, Sec. 7, 1972 Montana Constitution.
The principle of res judicata in conjunction with state
and federal rules of civil procedure requiring plaintiffs to
include in one action all causes based on publications made by
the defendant prior to the time of suit, perhaps offers the best
method of resolving the problem of multiple suits.
Much has been said in the briefs concerning the infringe-
ment upon freedom of the press if the multi-publication rule is
adopted. Historically, the free press amendment is construed to
mean freedom from three major types of restraint: censorship,
licensing, and seditious libel, which is defamation of the
government. Firstamerica Dev. Corp. v. Daytona Beach N.J.
Corp, (Fla. 1966) 196 So. 2d 97.
The United States Supreme Court has repeatedly stated
that freedom of speech and press does not permit the publica-
tion of libels. Chaplinsky v. New Hampshire, 315 U.S. 568,
62 S. Ct. 766, 86 L.ed 1031; Beauharnais v. Illinois, 343 U.S.
250, 72 S. Ct. 725, 96 L.ed 919, (reh.den. 343 U.S. 988, 72
S. Ct. 1070, 96 L.ed 1375); Roth v. United States, 354 U.S. 476,
77 S. Ct. 1304, 1 L ed 2d 1498, (reh. den. 355 U.S. 852, 78 S. Ct.
8, 2 L e d 2d 60).
Freedom of speech, expression, and press was intended
to assure the unfettered interchange of ideas for the bringing
about of political and social changes desired by the people.
Roth v. United States, 354 U.S. 476, 77 S. Ct. 1304, 1 L ed 2d
1498. It was not designed to confer special privileges upon
persons engaged in the publishing business. Barber v, Time,
Inc., 159 S.W.2d 291, 348 Mo. 1199; Dupont Engineering Co. v.
Nashville Banner Pub. Co. 13 F.2d 186. If we were to hold that
a libel action could be brought only in the state in which these
national magazines were printed, the advantage of the press
over the public would be unconscionable.
Defendants contend the reasoning supporting the multiple
publication rule has been outdated by technological changes in
the printing field. They contend modern typesetting machines
and rapid steam printing presses have made it possible to repro-
duce a number of copies of a single publication far beyond any
number within the realm of contemplation a century ago.
Expanding a magazine to nationwide circulation may be
conducive to a true free press. The widespread circulation of
defendants' magazines suggests that their existence is predicated
upon a national market. But such a magazine cannot exercise
that right without observing corresponding responsibilities.
Freedom of the press was never intended to permit a business,
whose publication is prepared for a national audience,
to be free from suit in all states but that of printing. Curtis
Publishing Company v. Golino, 383 F.2d 586.
For these reasons we adopt the multi-publication rule.
IN THE SUPREME COURT OF THE STATE OF MONTANA
No. 12389
WADE V. LEWIS, SR.., and ELKHORN
MINING COMPANY, a Montana Corporation,
VS.
Plaintiff and Respondent,
F -
' .dd
READER'S DIGEST ASSOCIATION INC.,
a Corporation and the HEARST CORPORATION, ,
I
&*A W 4 C
F
d
CbEWlg OF SUPRLU~IE: Q & ~
C
Defendants and Petitioners. S ~ T E
OF ~o&t~sur
ORDER AMENDING OPINION
PER CURIAM:
IT IS ORDERED that the above-captioned opinion be
amended in the following manner:
In the first paragraph on page 2, the second line
which reads "pursuant to the provisions of Rule 1 of the Montana
Rules of Appellate Civil Procedure" should be changed to read
"pursuant to the provisions of Rule 1 of the Rules of the Montana
Supreme Court".
DATED this 24th day of July, 1973.