The opinion of the court was delivered by: STERN
Plaintiffs Schiavone Construction Co. and Ronald A. Schiavone bring this action pursuant to 28 U.S.C. § 1332, contending that defendant Time, Inc. published a defamatory statement about them in the August 23, 1982 issue of Time magazine. Since we find that publication of the statement is privileged as a fair and accurate report of an official action or proceeding, the complaint will be dismissed.
Plaintiff Ronald A. Schiavone is an officer and principal shareholder of plaintiff Schiavone Construction Co. Prior to his appointment as United States Secretary of Labor, Raymond J. Donovan was also affiliated with the plaintiff company. In late 1981, in response to numerous allegations linking Donovan to members of organized crime, a special prosecutor was appointed to investigate the asserted ties. On June 26, 1982, the special prosecutor, Leon A. Silverman, filed a report in which he concluded that there was insufficient credible evidence to support a prosecution of Donovan for the alleged wrongdoing. Additional allegations surfaced after the filing of this report, however, leading Silverman to reopen the investigation. On August 23, 1982, under the headline "Jury Still Out/Donovan probe is reopened", Time magazine reported on the reopening of the investigation. The final paragraph of the four paragraph story reads as follows:
The FBI faces some tough questioning of its own. The Senate Labor Committee is investigating the bureau's handling of Donovan's confirmation probe 18 months ago. The personal files of FBI Director William Webster, forwarded to the committee last month, reveal that the name of Schiavone appeared several times in the bureau's reports on the 1975 disappearance of former Teamster Boss Jimmy Hoffa. That detail would surely have intrigued both the Senate committee that approved Donovan's nomination in February 1981, and the special prosecutor this year. But neither learned about it until last month.
On September 10, 1982, Silverman issued a supplemental report which concluded, as had the original report, that there was insufficient credible evidence to support a prosecution of Donovan. The supplemental report stated that among the documents provided to Silverman by Webster after the release of Silverman's first report was a memorandum from Webster to the Executive Assistant Director of the FBI, dated December 15, 1980. Defendant states that this memorandum formed the basis for its report that the name of Schiavone appeared in the FBI's files on the Hoffa disappearance. As related in the supplemental report, the memorandum states, in pertinent part:
Mr. Edwin Meese called during my absence at 10:15 a.m. 12/12/80, and said that he would return the call upon my return. He was tied up with President-elect Reagan and asked Mr. Pen James to return the call, Mr. James asked whether we had reached any conclusion as a result of our inquiry into Pat Donovan. I checked with Mr. Revell and based on information which he supplied, as well as my recollection of conversation with Mr. Mullen while I was in New York on December 10th, that we had reviewed all our indices and had checked with all field offices and nothing negative had been disclosed. I advised that a company Chivone (PH), in which he apparently had a very substantial interest, had appeared a number of times in reports in our HOFEX [sic: Hoffex] case, but that none of these suggested any criminality or organized crime associations.
Supplemental Report of the Special Prosecutor, Ex. to Br. in Opp. to Defendant's Motion to Dismiss (Plaintiffs' Br.) at 38-39. The supplemental report states that Silverman interviewed Webster about the matter on August 13, 1982. The special prosecutor summarized the conversation with Webster about the December 15, 1980 memo as follows:
With respect to the December 15, 1980, memorandum, Director Webster stated that the Hoffex reference is incorrect -- that, at the time of the December 12, 1980, communications, the Hoffex files had not been checked. Moreover, the Director stated that files had recently been checked and it was determined that there were no references to SCC therein.
The Director attributed that erroneous Hoffex reference to information which he received from certain subordinates. He was uncertain as to which of the subordinates provided it. He stated that he did not know where he would independently come up with the Hoffex reference since he was not particularly familiar with the details of that file.
On November 12, 1982, plaintiff Ronald Schiavone wrote a letter to the defendant stating that Schiavone Construction Co. and its employees had been "severely damaged" by the defamatory allegations concerning the company which had been "made by others" and published by the defendant. Complaint, Ex. B.
The letter went on to state:
Given the torrent of slander issuing from protected sources over many months against which we were virtually helpless, the inference of guilt at least to some extent is understandable. The media, through its publishing and republishing of the allegations understandably (indeed in most cases, forgivably) but alas unfortunately, exacerbated our problem. What we now fail to understand, in light of the Silverman reports, is that none of the major media have seen fit to publicly ponder the possibility of an organized ...