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Wednesday, May 19, 2010

The Fair Report Privilege in NJ: "Misappropriate" = "Steal"?

In Salzano v. North Jersey Media Group, 2010 WL 1849852 (May 11, 2010), the New Jersey Supreme Court addressed important issues regarding the scope and application of its fair report privilege.  First, the court held that defendants may receive the benefit of the privilege when repeating allegedly defamatory allegations taken from “initial pleadings,” such as a filed complaint in a civil case.  Second, the court held, albeit by an equally divided vote, that defendants’ reporting regarding a civil complaint filed in bankruptcy court was fair and accurate even though it described the complaint as alleging that the plaintiff had “stolen” funds from a bankrupt corporation when the complaint actually stated that the plaintiff had misappropriated funds.   The split on the second issue reflects a division amongst the judges on whether the dictionary definition of “misappropriate,” or its arguably less pejorative “street” definition, is the relevant benchmark for judging its rough equivalence with “steal.”

For those not familiar with the fair report privilege, some background is in order.  The fair report privilege provides vital protection against defamation suits for journalists reporting on government affairs.  The fair report privilege stems from common law or sometimes from statute, and it protects journalists or others who repeat “defamatory matter concerning another in a report of an official action or proceeding or of a meeting open to the public that deals with a matter of public concern.” Restatement (Second) of Torts Sec. 611.  However, the privilege is only available if “the report [of the official action or proceeding or meeting] is accurate and complete or a fair abridgement of the occurrence that is recounted.”  Id.      

Three rationales underpin the fair report privilege.   The narrowest rationale for the fair report privilege is the “agency” rationale.  Since any member of the public has a right to attend a public meeting or obtain access to “open” government documents, the press is privileged to repeat accurately information from these sources because it is acting as an “agent” for the public in doing so.  A second rationale is the “public supervision” rationale, which recognizes the checking function of the press in scrutinizing government conduct and providing the public information about what their government officials are doing.  A closely related but potentially broader rationale is the “public information” rationale, which posits that the press should not be held liable for informing the public about matters of public interest, because such information is essential to intelligent voting and the formation of enlightened public opinion. 

The scope of the privileges varies from jurisdiction to jurisdiction, depending in part on which rationale is applied.  For example, some jurisdictions permit a defendant to invoke the privilege when the defendant reports information obtained from a “leaked” government document, but some deny the privilege because the defendant cannot claim to be acting as an agent in reporting on a document to which the public had no access.  Likewise, some jurisdictions permit a defendant to invoke the privilege even if there is no attribution to the government source; some don’t, because the public cannot evaluate government performance if they do not know the source of the information.

In Salzano, the New Jersey Supreme Court concluded that all three rationales—agency, public information, and public supervision—supported application of the privilege to fair and accurate reports of initial pleadings in a civil case.  In New Jersey, civil complaints are “public documents to which the citizens . . . have free access.”  The court concluded, therefore, that the media must be protected when they act as surrogates for the public in reporting “on every aspect of the administration of justice,” including the filing of a complaint.  In reaching this conclusion, the court rejected the argument that extension of the privilege to reports on filed complaints would promote the filing of frivolous lawsuits designed solely to put defamatory falsehoods into circulation.  If such abuses occur, the court said, they can be remedied with sanctions on attorneys and parties as well as suits for malicious prosecution or malicious use of process.  The court expressed faith that citizens have a “sophisticated understanding of the court system and [are] capable of evaluating information gleaned from a complaint;” therefore, pleadings do not need to be “sanitized” or “filtered through a veracity lens” before publication.  Clearly one can question both the court’s faith in the sophistication of the citizenry and the efficacy of remedies against the filing of complaints filled with defamatory falsehoods.  Moreover, one can certainly question whether extending the privilege to cover filed pleadings upon which a government official has not yet acted furthers public scrutiny of the administration of justice.  Regardless, the extension of the fair report privilege to “initial pleadings” provides an important shield against defamation liability for anyone reporting on the court system and the Salzano decision places New Jersey in the modern trend toward giving the privilege broad scope. 

Equally important is the leeway the New Jersey Supreme Court gave the media defendants in evaluating the fairness and accuracy of their reports on the complaint filed by the bankruptcy trustee.  The complaint stated that plaintiff “unlawfully diverted, converted and misappropriated [the bankrupt corporation’s] funds” by using two checks from the corporation to purchase his residence and by using the corporation’s credit card for over $200,000 in personal expenses.  The defendants published a story about the allegations in the complaint under the headline “Man accused of stealing $ 500,000 for high living” and asserted in the body of the story that the bankruptcy trustee’s complaint accused plaintiff of stealing.  In evaluating whether the published stories involved “full, fair and accurate account of the official proceeding,” the court focused on whether the defamatory “sting” of the defendants’ reports was “essentially the same as that of the complaint.”  With regard to the language regarding plaintiff’s “stealing” of funds, the court noted that the headline had to be read in the context of the whole article, which clearly indicated that the allegations of the complaint had not yet been adjudicated.  The court then looked to the dictionary definitions of “misappropriation” and “steal” to reach the conclusion that “it is clear that the fair and natural meaning of the word ‘steal’ given by reasonable person of ordinary intelligence is ‘misappropriate.’”

What is fascinating about this conclusion is that the justices on the New Jersey Supreme Court were equally divided on the question whether an allegation in a civil case that the “white-collar” plaintiff “misappropriated” funds had as much of a defamatory “sting” as an allegation that he stole them.    Justice Hoen’s concurring and dissenting opinion notes that the word “steal” “has the same meaning as misappropriate, but much stronger negative connotations.”  According to Justice Hoen, the word “steal” “carries with it the clear connotation of a crime, together with its attendant evil-minded mens rea. None of that is faithful to the actual allegations made in the Bankruptcy Court by the Trustee.”   Although the divide among the justice about the denotation and connotation of “misappropriate” seems purely semantic, the opinions in Salzano provide an interesting prism into contemporary attitudes about the culpability of white-collar “misappropriation” (in a civil case) as opposed to the simple “street crime” of theft.

Posted by Lyrissa Lidsky on May 19, 2010 at 02:34 PM in Books, First Amendment, Torts | Permalink


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