TRENTON, N.J. (CN) – Two New Jersey men charged with securities fraud by the Securities and Exchange Commission cannot sue a local paper that told readers they had been arrested, the state Supreme Court ruled.
Ronald Durando and Gustave Dotoli sued the Nutley Sun and its owner, North Jersey Media Group, over the “teaser” to an article that the paper ran on Dec. 5, 2005. Since that edition was a promotional issue, it went out to the newspaper’s regular subscribers and an additional 2,500 nonsubscribers.
One month earlier, the SEC claimed that Nutley-based Durando and Dotoli committed insider trading and ran a $9 million “pump and dump” stock fraud.
The front-page teaser to Nutley Sun’s article said: “Local men arrested in ‘pump and dump’ scheme.”
Even though the teaser did not name Durando and Dotoli, and the page 11 article did not repeat mention of the arrest, the accused fraudsters claimed defamation.
Durando and Dotoli’s attorney quickly emailed the Sun with a threat of litigation and demand for retraction. After consulting with the publisher and in-house counsel, the Nutley Sun ran a boldface, large-print retraction on the front page of its Dec. 22 edition. That issue did not go out to the additional 2,500 nonsubscribers.
But Durando and Dotoli had already filed suit on Dec. 16. The complaint did not name Nutley Sun executive editor Paul Milo. Finding an absence of actual malice, the trial court dismissed the lawsuit and the appellate division affirmed.
A five-justice majority of the New Jersey Supreme Court upheld the decision Tuesday.
“Although this case unquestionably involves sloppy journalism, the careless acts of a harried editor, the summary-judgment record before the court cannot support a finding by clear and convincing evidence that the editor knowingly or in reckless disregard of the truth published the false front-page teaser,” Justice Barry Albin wrote for the court.
“The record does not permit us to conclude that Milo’s professions – that he made a mistake – are inherently incredible or improbable,” the 30-page decision states. “He was a harried editor, responsible for a staff of ten and reading hundreds of pieces of correspondence, racing to meet a printing deadline. Somehow, he mistakenly reconfigured the headline of the article, ‘Local men charged in stock scheme,’ to the front-page teaser, ‘Local men arrested.'”
“The evidence does not suggest that Milo would have subjected himself to professional ridicule by making such a mistake or misstatement of the truth,” Albin added. “Once the mistake was revealed to him by the plaintiffs’ counsel, he set in motion steps to correct it.”
“A free and robust press, one that does not engage in self-censorship from fear of ruinous lawsuits, is essential to the enlightened democracy. Our jurisprudence recognizes that the free and impaired flow of information on matters of public concern necessarily leads to some erroneous reporting due to human error. In those circumstances, freedom of speech and the press are values that outweigh the right to security in one’s personal reputation. Provided that a reporter or editor does not publish a false and defamatory statement with actual malice – that is, knowing that the statement is false or recklessly disregarding the truth – the erroneous statement contained in an article touching on a matter of public interest is not actionable.”
Justice Helen Hoens authored a dissenting opinion that said the majority downplayed the role of the front-page teaser.
“Commenting that the teaser did not identify plaintiffs by name, the majority has attempted to negate the significance of being defamed in a large-print, front-page headline, and in the process has avoided having to grapple with the implications of a defamatory statement divorced from an accurate article that might otherwise be read and considered as part of a unified whole,” according to the dissent, joined by Justice Jaynee LaVecchia. “Those analytical shortcomings led the majority to erroneous conclusions of fact and law.
“Because the majority’s analysis of the law and recitation of the facts are flawed, and because it can only serve to embolden the very kind of sloppy, careless journalistic practice that led to the publication of this plainly defamatory statement on the newspaper’s front page, I dissent,” the 18-page opinion states.