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Medico v. Time Inc.

decided: March 2, 1981.

MEDICO, PHILIP T., APPELLANT
v.
TIME, INC.



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA C.A. No. 79-00597

Before Adams, Garth and Sloviter, Circuit Judges.

Author: Adams

Opinion OF THE COURT

This appeal from a summary judgment in favor of the defendant presents an important question concerning the law of defamation. We must review the district court's determination that a news magazine enjoys a privilege, under the common law of Pennsylvania, to publish a summary of FBI documents identifying the plaintiff as a member of an organized crime "family." We affirm.

I.

In its March 6, 1978 issue, Time magazine published an article describing suspected criminal activities of then-Congressman Daniel J. Flood. The article stated that Stephen Elko, a former Flood aide, had characterized the Congressman as a "muscler" an official who used his considerable influence to direct federal contracts to individuals and companies that responded with cash. The article further stated that at least eight separate United States Attorneys' offices had undertaken investigations of Flood's activities.

As an example of suspected misconduct, the Time article listed the following:

Among the matters under scrutiny: Ties between Flood and Pennsylvania Rackets Boss Russell Bufalino. The suspected link: the Wilkes-Barre firm of Medico Industries, controlled by President Philip Medico and his brothers. The FBI discovered more than a decade ago that Flood steered Government business to the Medicos and traveled often on their company jet. Investigators say Bufalino frequently visited the Medico offices; agents tape-recorded Bufalino's description of Philip as a capo (chief) in his Mafia family. Elko's testimony has sparked new investigative interest in the Flood-Medico-Bufalino triangle.

Circulation of the March 6, 1978 issue of Time exceeded four million copies.

Following publication of the article, Medico instituted a defamation action against Time, Inc., in federal district court on the basis of diversity jurisdiction.*fn1 Medico alleged that the article's import was that he held a high position in an organized criminal society.

Time initially moved for summary judgment in June 1979. It asserted that the substance of the article was not that Medico actually participated in criminal activities, but only that FBI agents had recorded Russell Bufalino's description of Medico as a Mafia capo. Time argued that this latter statement was true. In support of its motion, Time submitted the affidavit of John Danahy, a former FBI official, and two documents an FBI report on "La Cosa Nostra, Philadelphia Division," and a personal profile report on Philip Medico which Danahy identified as official FBI documents. Both documents state that an "informant" alternately code-named "PH T-3" and "PH 591-C*" has identified Medico as a close associate of Russell Bufalino and a "capo" or "capodecina" in La Cosa Nostra. The affidavit states that La Cosa Nostra is the FBI's term for the Mafia, and that the "informant" was not a person, but an electronic listening device, by means of which a recording had been made.

The district court agreed with Time that the substance of the allegedly defamatory article was that the FBI had recorded Bufalino's identification of Medico as an underworld leader. It concluded, however, that the supporting documents which Time submitted did not resolve all genuine issues concerning the truth of its report. Although the FBI documents corroborated the Time article, the court ruled that the affidavit Time had advanced to authenticate the documents was not based on the personal knowledge of the affiant, as required by Rule 56(e). The court therefore denied Time's motion for summary judgment.

In January 1980, Time again moved for summary judgment based on the substantial truth of its publication. Time resubmitted the two FBI documents it had proffered to support its initial motion, supplemented with affidavits of two FBI agents. One affiant, David Breen, had supervised an investigation of organized crime that the FBI's Philadelphia Office had conducted. He stated that the Philadelphia Office had prepared the report on La Cosa Nostra at his direction, and that Medico's personal profile card had been prepared and maintained by the FBI. Breen further stated that, based on his personal experience with the FBI, he knew from the code names assigned the "informant" that the information in the documents was derived from a tape-recording made by means of an electronic listening device and transcribed by highly trained individuals capable of identifying the voices of the persons recorded. The other affiant, Patrick Collins, also had served in a supervisory position with the FBI. He confirmed Breen's interpretation of the documents, primarily on the basis of his "general experience with similar such reports."

On this occasion the district court granted Time's motion for summary judgment, but not on the basis of the truth defense. The court expressed doubt about its earlier conclusion that, in order to prevail on a truth theory, Time need only establish that FBI agents recorded Bufalino's description of Medico, rather than that Medico was in fact a Mafia chieftain. The court acknowledged that Pennsylvania law might require proof of the underlying assertion, but decided it did not have to resolve the issue; the court concluded that, whether the statement sued upon be given a broad or narrow scope, the evidentiary affidavits that Time submitted failed to establish the truth defense. Although the court found that the affidavits established the authenticity of the FBI report and personal file card as FBI materials, it also determined that neither affiant had personal knowledge of the "factual basis" for the documents. Neither Breen nor Collins had installed the listening devices allegedly used in recording Bufalino's conversations, had transcribed the recorded conversations, or had personal knowledge of the identity of all the participants in the relevant conversations.

After declining to hold for Time on the truth theory, the district court considered whether the Time article fell within the common law privilege accorded the press to report on official proceedings. The judge seemed troubled because Pennsylvania courts apparently had so far extended the privilege only to reports of proceedings open to the public, whereas Time had summarized reports which the FBI had kept secret and whose release to Time evidently had been unauthorized. But after an exhaustive analysis of Pennsylvania precedents, the court concluded that Pennsylvania courts, if presented with the question, would find summaries of non-public government reports within the privilege. The district judge then ascertained that the Time article represented a fair and accurate account of the FBI documents. Accordingly he held that the publication was privileged, and awarded summary judgment in favor of Time.

On appeal, Medico argues that the district court incorrectly determined that Time's publication was privileged under Pennsylvania law. Time counters that the district judge accurately construed the applicable state law on privilege, and contends further that the defense of truth applies and affords an alternate basis for affirming the district court. Our analysis of the district court's result will entail examination of the state law precedents regarding the fair report privilege, of the policies underlying them, and of Constitutional constraints on defamation law.*fn2

II.

The fair report privilege on which the district court relied developed as an exception to the common law rule that the republisher of a defamation was subject to liability similar to that risked by the original defamer.*fn3 Pennsylvania had adopted the republication rule by the turn of the century,*fn4 and no case brought to our attention suggests that Pennsylvania has abandoned it.*fn5 With this rule, the law indulged the fiction that the republisher of a defamatory statement "adopted" the statement as his own.*fn6 The common law regime created special problems for the press. When a newspaper published a newsworthy account of one person's defamation of another, it was, by virtue of the republication rule, charged with publication of the underlying defamation. Thus, although the common law exonerated one who published ...


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