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$2.25-Million Verdict in Investor's Libel Suit Is Upheld

June 02, 2004|David G. Savage | Times Staff Writer

WASHINGTON — The Supreme Court on Tuesday let stand a $2.25-million libel verdict against the Santa Barbara News-Press for having wrongly implied that an investor who had hoped to buy a controlling share in a local savings and loan had been investigated by the government for defrauding investors.

Actually, the investor's former business partner had gone to prison for fraud.

The California courts had held that the investor, Leonard M. Ross of Beverly Hills, was a private figure under the libel laws, not a public figure, a ruling that made it easier for Ross to win his case. The Supreme Court refused to reconsider that ruling or the libel verdict itself.

The justices declined to hear the case without comment or dissent, ending a nearly 16-year legal battle that began in an era when many of the nation's savings and loan institutions were in financial trouble. It also reads as a cautionary tale for business reporters and editors.

In their appeals, lawyers for the newspaper maintained that its stories about Ross were "substantially true," but for some "minor inaccuracies."

They also urged the justices to rule that "individuals who own or control businesses" in closely regulated industries, such as banking, should be deemed public figures. Otherwise, the press might be wary of aggressively reporting on powerful persons in the business world who shun the limelight, they said.

In 1988, Ross and his wife filed an 878-page application with a state regulatory agency as part of their tentative plan to increase their holdings to 24.9% in Santa Barbara Savings and Loan.

Relying on these documents and a series of interviews, the newspaper published a lengthy story about Ross in 1988 saying he been "investigated by several law enforcement agencies." The story also reported that he had not been prosecuted or convicted.

However, in a chronology that ran with the story and in a follow-up article, the newspaper combined two sets of incidents and suggested that Ross had been investigated for a fraud perpetrated by his former business partner.

He sought a retraction and later sued the newspaper for libel.

Under libel laws, the news media are generally protected from lawsuits when reporting on public figures, except when the stories are recklessly or knowingly false. By contrast, if a person is considered a private figure, a newspaper can be held liable if it negligently publishes a false and defamatory fact.

But it is not always clear who counts as a public figure.

Ross was a private investor and had not sought publicity, the California courts ruled in holding that he was a private figure.

In 1993, a jury ruled for Ross and handed down a $7.5-million verdict against the newspaper. That award was overturned as excessive by a trial judge and a state appeals court.

In a second trial in 2001, a Los Angeles Superior Court jury ruled again that Ross had been libeled, and it awarded him $2.25 million in damages. A state appeals court upheld the verdict, and the state's high court refused to review the case.

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