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No instruction on damages doesn't negate libel verdict

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NEWS MEDIA UPDATE   ·   THIRD CIRCUIT   ·   Libel   ·   Sep. 16, 2005

NEWS MEDIA UPDATE   ·   THIRD CIRCUIT   ·   Libel   ·   Sep. 16, 2005

No instruction on damages doesn’t negate libel verdict

  • Jury instructions which ignored presumed damages did not constitute a fundamental error under Pennsylvania defamation law, a federal appeals court ruled.

Sep. 16, 2005  ·   A judge’s failure to instruct a jury that it could consider libel damages even without evidence of actual harm or monetary loss is not a fundamental error allowing for the reversal of the trial court’s decision under Pennsylvania law, a federal appeals court ruled Monday.

The court found “neither fundamental error in the omission of a presumed damages instruction nor prejudice resulting in a miscarriage of justice,” Chief Judge Anthony J. Scirica wrote for a three-judge panel of the U.S. Court of Appeals in Philadelphia (3rd Cir.). The federal courts applied Pennsylvania law to the libel case because that is where the “injury” in the case would have occurred.

This case arose when a federal jury found The New York Times liable for defamation in 2004. The newspaper used an image of the Web site of Franklin Prescriptions Inc. in an Oct. 25, 2000, article, “A Web Bazaar Turns into a Pharmaceutical Free For All” about the dangers of buying fertility drugs on the Internet. The jury awarded no damages, however, because it found that Franklin Prescriptions suffered no harm.

Franklin Prescriptions appealed, contending that the court erred by not instructing the jury to consider presumed damages. Under Pennsylvania defamation law, juries that have found a party liable for defamation generally cannot consider damages with no evidence of actual harm or monetary loss. However, it is uncertain whether this general rule applies when the plaintiff has proven “actual malice” — knowledge of falsity or reckless disregard for the truth. The jury did not find The New York Times liable for actual malice.

The Third Circuit found the lack of the jury instruction did not warrant reversing the case, because it did not result in an unfair trial since Franklin Prescription did not appeal properly.

Pennsylvania courts have conflicting decisions on the availability of presumed damages when the plaintiff has proved actual malice, Scirica noted.

“The ruling helps media clients because damages are a recurring issue,” Times attorney Carl A. Solano said. “It helps when we’re talking about presumed damages, but we would have preferred addressing the confusion in Pennsylvania law. It’s an expected disappointment.”

The court avoided this confusion, focusing instead Franklin Prescriptions’ failure to file a timely objection to the jury instruction and finding that the jury never found actual malice on the part of the Times.

(Franklin Prescriptions, Inc. v. New York Times Co.; Media counsel: Carl Solano, Schnader Harrison Segal & Lewis LLP, Philadelphia, Pa.)CM

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