$10 million libel judgment overturned

In late September, a three-judge panel of the U.S. Court of Appeals in Atlanta (11th Cir.) vacated a federal District Court’s $10 million defamation award based on a broadcast about a real estate scheme.

The court found that financier Alan Levan and BankAtlantic Financial Corp. had not presented sufficient evidence to show that ABC acted with actual malice — knowledge of falsity or reckless disregard for the truth.

In late November 1991, ABC broadcast an episode of “20/20” that allegedly portrayed Alan Levan and BankAtlantic Financial Corp. (BFC) as unfairly taking advantage of investors in limited partnerships in real estate by inducing them to participate in transactions known as “roll-ups, ” in which real estate was swapped for BFC bonds at the height of the savings and loan crisis.

In February 1992, Levan and BFC brought a lawsuit in federal District Court in Miami against ABC and producer Bill Willson for false light invasion of privacy and defamation. They claimed ABC made a number of false statements or implications in the broadcast.

The case went to trial in late 1996, and the jury found for BFC and Levan, awarding them a total of $10 million in compensatory damages. However, the court dismissed the false light claim against both Willson and ABC. ABC and Willson subsequently appealed the defamation judgment to the U.S. Court of Appeals in Atlanta (11th Cir.).

Levan and BFC argued before the federal appellate court that the gist of the broadcast was that Levan knowingly misled the limited partners into accepting the rollup transaction to his and BFC’s benefit. They asserted that the broadcast implied that Levan had something to hide.

ABC and Willson, however, argued that the gist of the story merely was that the roll-ups were unfair.

In late September 1999, the appellate court held Levan and BFC did not prove that ABC broadcast the story with actual malice and dismissed the defamation. According to the appellate court, Levan and BFC would have to prove that the broadcast statements were false and defamatory, as well as made with actual malice — knowledge of falsity or reckless disregard for the truth — to recover under their defamation claim and that if “the gist is substantially true, then minor inaccuracies are insufficient to prove actual malice.”

The appellate court concluded that the evidence was insufficient to show that ABC and Willson acted with actual malice. According to the appellate court, “ABC clearly implied that the limited partners got a raw deal, one so bad that a viewer would believe Levan must have known that the deal was unfair to his limited partners, particularly in light of his financial expertise.” The court explained that given the large number of sources who “condemned the rollups as unfair to the limited partners,” it was apparent that ABC did not doubt the truthfulness of the gist of its broadcast. (Levan v. Capital Cities/ABC, Inc.)