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Federal appellate court reverses $10 million defamation judgment

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  1. Libel and Privacy

    NMU         ELEVENTH CIRCUIT         Libel         Oct 6, 1999    

Federal appellate court reverses $10 million defamation judgment

  • A federal appellate court found a lack of “actual malice” in an ABC broadcast about a bank’s “rollup” investments and dismissed the defamation claim brought against the network.

A three-judge panel of the U.S. Court of Appeals in Atlanta (11th Cir.) in late September vacated a Florida District Court’s $10 million defamation judgment based on a broadcast about a real estate scheme and dismissed the defamation claim brought against ABC.

The appellate court rejected a Miami federal District Court’s 1996 award of $10 million in compensatory damages for Alan Levan and BankAtlantic Financial Corporation (BFC) and instructed the District Court to dismiss the claim against ABC. According to the appellate court, the defamation claim failed because the evidence presented did not establish that ABC broadcast the story with actual malice — knowledge of falsity or reckless disregard for the truth.

An episode of ABC’s “20/20” allegedly portrayed BFC and Levan as unfairly taking advantage of investors in limited partnerships in real estate by inducing them to participate in transactions known as “rollups,” in which real estate was swapped for BankAtlantic bonds at the height of the savings-and-loan crisis.

BFC and Levan claimed that ABC made false and misleading statements in the broadcast with actual malice and that those statements harmed them.

The appellate court stated that Levan and BFC would have to prove that the broadcast statements were false and defamatory, as well as made with actual malice, and that if “the gist [of the statement] is substantially true, then minor inaccuracies are insufficient to prove actual malice.”

The court concluded that the evidence was “insufficient to demonstrate the existence of actual malice by clear and convincing evidence. In view of the vast number of objective sources who condemned the rollups as unfair to the limited partners, we conclude . . . ABC did not entertain serious doubts that the gist of its broadcast was true.”

(Levan v. Capital Cities, Inc./ABC, Inc.; Counsel: Floyd Abrams, New York City)

© 1999 The Reporters Committee for Freedom of the Press

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