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Dairy Stores Inc. v. Sentinel Publishing Co.

July 21, 1983

DAIRY STORES, INC., T/A KRAUSZER'S FOOD STORES, PLAINTIFF,
v.
SENTINEL PUBLISHING CO., INC., PATERSON CLINICAL LABORATORY, INC., AND KATHLEEN DZIELAK, DEFENDANTS



Skillman, J.s.c.

Skillman

This defamation action raises substantial issues concerning the applicability of the "actual malice" standard of liability of New York Times v. Sullivan to the publisher of a derogatory newspaper article about a commercial product and to the laboratory which tested the product and provided the derogatory information.

The alleged defamatory statements were contained in three articles published in two central New Jersey newspapers called "The Sentinel" and "The Suburban" during the 1981 water shortage. The owner of the newspapers is defendant Sentinel Publishing Company (Sentinel) and the author of the articles was one of its reporters, defendant, Kathleen Dzielak. The theme of the first article, which appeared under the headline "Water Sales Booming," was that bottled water companies were enjoying heavy sales while the State was rationing tap water. The theme of the second article, published under the headline "Firms Protect Sources," was that sellers of bottled water were reluctant to disclose their sources of supply. It said this fact "became evident following attempts to discover the name of the spring which supplies the water for Covered Bridge, a product sold at local Krauszer's stores." The primary focus of the claims of plaintiff, Dairy Stores, Inc., t/a Krauszer's Food Stores (Krauszer's), is the third article. Published under a banner headline, "Spring Water/Lab Analysis Casts Doubt on Content," the initial paragraphs of the article read as follows:

A sample bottle of "Covered Bridge Crystal Clear Spring Water," sold at Krauszer's convenience food stores, does not contain pure spring water, according to a laboratory analysis obtained by the Sentinel Newspapers.

Tests conducted on the product, purchased at Krauszer's store at 23 N. Main St., Milltown, showed a chlorine content of .1 parts per million. Ralph Pugliese,

director of the state-certified Paterson Clinical Lab, which conducted the tests, said pure spring water should not contain any chlorine.

"I can't see how it could possibly be spring water unless the spring source was contaminated and chlorine was added at the source. Since we thought we were dealing with a spring water sampling, when we received a .1 reading we ran the test again four or five times and had two chemists look at it to make sure."

The article went on to say that a national sales manager for Krauszer's, when informed of the lab results, "insisted that no chlorine is added to Covered Bridge water at any step of the operation and that the water does come from a spring."

After the publication of the articles, Krauszer's asked for a retraction. This was refused. Krauszer's then filed this suit. Named as defendants are not only Sentinel and its reporter, Dzielak, but also Paterson Clinical Laboratories, Inc. (Paterson), which told Dzielak the water contained chlorine and hence could not be uncontaminated spring water. The claims against Sentinel and Dzielak are for defamation. The claim against Paterson is for negligence although, as discussed later in the opinion, it should be treated as a claim for defamation and/or for product disparagement. The case is before the court on motions for summary judgment filed on behalf of all defendants.

I

The threshold issue in every defamation action is whether the language in question is reasonably susceptible of a defamatory meaning. Lawrence v. Bauer Pub. & Print., Ltd., 89 N.J. 451, 455 (1982); Kotlikoff v. The Community News, 89 N.J. 62, 67 (1982). A defamatory meaning will be found only if the language asserts or implies a statement of fact which is damaging to reputation. Kotlikoff v. The Community News, supra, 89 N.J. at 68-70. And liability may be imposed only if the statement of fact is shown to be false. Ibid.

The Sentinel series contains at least one statement of fact which is reasonably susceptible of a defamatory meaning -- that is, that a laboratory analysis had shown Krauszer's bottled water not to be spring water. This is clearly a statement of

fact. Moreover, it is reasonably susceptible to a meaning harmful to Krauszer's reputation; indeed, it is difficult to perceive any reasonable non-defamatory interpretation which can be given to the statement. And the fact that the article purports to report upon a test analysis conducted by a third party, Paterson, does not prevent Krauszer's from asserting claims for defamation against Dzielak and Sentinel since republication of a defamatory statement is itself defamatory. Restatement (Second) of Torts ยง 578 (1977). See Lawrence v. Bauer Pub. & Print., Ltd., supra, 89 N.J. at 461. There are also contested issues of fact as to the falsity of the statement in view of deposition testimony by several of Krauszer's witnesses that its product is in fact clear spring water. In short, viewed most favorably to Krauszer's as required on these motions for summary judgment, the article may be read as falsely stating, to the detriment of the reputation of Krauszer's and of its Covered Bridge bottled water, that water marketed as pure spring water was in fact tap water or contaminated spring water. Therefore, apart from the constitutional constraints discussed in sections II and III of this opinion, contested issues of fact material to a cause of action for defamation would be presented and the court would be required to deny summary judgment.

II

Commencing with New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), the Supreme Court of the United States has decided a series of cases construing the First Amendment to limit the circumstances under which liability for defamation may be imposed. See, e.g., Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S. Ct. 1975, 18 L. Ed. 2d 1094 (1967); St. Amant v. Thompson, 390 U.S. 727, 88 S. Ct. 1323, 20 L. Ed. 2d 262 (1968); Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S. Ct. 1811, 29 L. Ed. 2d 296 (1971); Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974); Time, Inc. v. Firestone, 424 U.S. 448, 96 S. Ct. 958, 47 L. Ed. 2d 154 (1976); Hutchinson v. Proxmire, 443 U.S. 111, 99 S. Ct. 2675, 61 L. Ed. 2d 411

(1979); Wolston v. Readers Digest Ass'n, Inc. 443 U.S. 157, 99 S. Ct. 2701, 61 L. Ed. 2d 450 (1979). In New York Times the Court held that to recover for defamation, a public official must demonstrate that a damaging falsehood was published with "actual malice," that is, with knowledge of its falsity or with reckless disregard for its truth. In Butts, this requirement was extended to "public figures." In Rosenbloom, a plurality of the Court concluded that the New York Times standard should apply to any publication concerning "an issue of public or general interest." However, this view was repudiated in Gertz which held the New York Times standard inapplicable to any action for "defamatory falsehood injurious to the reputation of a private individual" (418 U.S. at 346, 94 S. Ct. at 3010), irrespective of the degree of public interest in the publication.*fn1 The Court in Gertz also refined its definition of a person who is a "public figure" subject to the New York Times standard in pursuing a defamation action. It said that a person who is not a "public figure for all purposes and in all contexts" may become a "public figure" for a "limited range of issues" by injecting himself or being drawn into a particular public controversy.

Every decision of the Court dealing with the limitations upon liability for defamation imposed by the First Amendment has involved personal defamation. See, e.g., Gertz v. Welch, supra, (attorney accused of being a "Communist fronter" and having a criminal record); St. Amant v. Thompson, supra (deputy sheriff accused of accepting a bribe). The Court has never

had occasion to consider the applicability of the principles developed in the New York Times line of cases to actions for the alleged defamation of business enterprises or the disparagement of their products or services.*fn2 However, a number of state and lower federal ...


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