Standard for libel suits based on subject matter

INDIANA–The Indiana Supreme Court established that all plaintiffs, not just public figures, must meet a heightened standard of proof to recover for libel in matters of public concern in a splintered 3-2 decision handed down in late June.

Justice Frank Sullivan Jr. wrote for the court that such plaintiffs must prove with clear and convincing evidence that the statements were made with “actual malice” — knowledge of falsity or reckless disregard of the truth.

The decision marked the first time the Indiana Supreme Court has spoken on the issue of what standard of liability would govern state libel claims since the U.S. Supreme Court held in 1974 that states could set their own standards of liability for private plaintiffs.

Members of the Supreme Court majority articulated different rationales supporting the same holding. Justices Sullivan and Myra Selby relied on the First Amendment to the U.S. Constitution, while Justice Theodore Boehm, who concurred but also wrote separately, relied on the Indiana Constitution and state law.

The case arose when the Fort Wayne Journal Gazette published an article concerning the health inspection and closing of a local Mexican restaurant. In September 1988, a health inspector noted several violations at Bandido’s and noted in his report: “Evidence of flies, roaches and rodents noted. Advise exterminator to do a full clean out of the premise. Rodent droppings noted only in restroom.” The Board of Health later revoked the restaurant’s health permit and closed its doors.

The Journal Gazette covered the closing of the local restaurant in a story published in early October 1988. However, although the story was accurate, the subheadline written by the copy editor read: “Health board shuts doors of Bandido’s; Inspectors find rats, roaches at local eatery.” Neither the health inspector nor the Board of Health ever found “rats” at Bandido’s. The day after the original story was published, the newspaper ran another story in which it noted the mistake and apologized. However, despite the apology, the owner of Bandido’s filed suit in the Noble Circuit Court in November 1988.

At the conclusion of the trial, a jury awarded Bandido’s $985,000 in compensatory and punitive damages. But the Indiana Court of Appeals reversed in 1996 because it found that Bandido’s had not proven actual malice with clear and convincing evidence. The Indiana Supreme Court affirmed that judgment.

Both Chief Justice Randall Shepard and Justice Brent Dickson vigorously dissented. Dickson argued that the court did not need to decide the standard of liability for private plaintiffs on matters of public concern because the trial court had found that Bandido’s was a limited-purpose public figure. Shepard’s dissent focused on how such a high standard of liability essentially barred recovery for defamation.

“The U.S. Supreme Court and thirty state supreme courts have concluded that a free society can flourish without making it so hard for the average person to defend his or her reputation as it will now be in Indiana,” Shepard wrote.

(Journal-Gazette Co. v. Bandido’s, Inc.; Media Counsel: Cathleen Shrader and James Fenton, Fort Wayne)