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Marcone v. Penthouse International Magazine for Men and Penthouse International Ltd. and Meredith Printing Corp.

February 6, 1985

MARCONE, FRANK J., APPELLEE
v.
PENTHOUSE INTERNATIONAL MAGAZINE FOR MEN AND PENTHOUSE INTERNATIONAL LTD. AND MEREDITH PRINTING CORP. AND CURTIS CIRCULATION COMPANY AND RASEN, EDWARD, PENTHOUSE INTERNATIONAL, LTD., APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania, C.A. No. 78-3733.

Author: Adams

Before ADAMS, HIGGINBOTHAM and VAN DUSEN, Circuit judges. OPINION OF THE COURT

ADAMS, Circuit Judge.

Once again this Court is called upon to chart the proper course between the Scylla of inadequately guaranteeing First Amendment protections and the Charybdis of diminishing an individual's right to reputation. Plaintiff Frank Marcone brought suit for libel against Penthouse, the International Magazine for Men and Penthouse International, Ltd. (collectively Penthouse). The district judge determined that Marcone was not a public figure and therefore charged the jury that it could award him compensatory damages upon a showing that the publisher was negligent. The jury awarded Marcone compensatory as well as punitive damages. Because the district judge erred in not classifying Marcone as a limited purpose public figure and because plaintiff failed to prove that the libelous statement was made with actual malice, the standard prescribed in New York Times Co. v. Sullivan, 376 U.S. 254, 11 L. Ed. 2d 686, 84 S. Ct. 710 (1964), we will reverse.

I.

Marcone is an attorney residing in Delaware County, a suburb of Philadelphia. During the mid-1970's he gained notoriety in part through his representation of the Pagans, a motorcycle gang headquartered in Marcus Hook, Pennsylvania, and a rival gang, the Warlocks. Marcone was also linked to these motorcycle gangs on a non-professional basis. In this regard, law enforcement agents stated Marcone frequented "the Castle," a 40-room mansion in Delaware County which served as the Pagans' headquarters. Among other things, the Castle was connected with the disappearance and death of five young women in 1976. An article in the Philadelphia Inquirer dated March 18, 1976, reported that Marcone once stated that he "occasionally went on weekend trips" with one of the motorcycle gangs. App. at 198a(5).

In February of 1976, a grand jury in Detroit, Michigan, handed down an indictment charging Marcone and 24 other co-defendants with conspiring "to knowingly, intentionally and unlawfully possess with intent to distribute, and to distribute marijuana" in violation of 21 U.S.C. §§ 841(a)(1), 846 (1982). In particular, the indictment charged that "during May, 1974, FRANK MARCONE gave $25,000 in United States currency to FREDERICK R. FREY in Philadelphia, Pennsylvania for the purpose of purchasing multi-hundred pound quantities of marijuana in California." Law enforcement agents stated that Marcone and the three other co-defendants from the Philadelphia area had frequent meetings at the Castle.

On May 19, 1976, the government withdrew the charges against Marcone without prejudice to his being reindicted in Philadelphia. An assistant United States Attorney in Detroit explained that the charges were dropped because of "legal technicalities" in tying Marcone to the larger conspiracy which involved defendants from San Diego to Montreal. For reasons not explained in the record, Marcone was not subsequently reindicted in Philadelphia.

Penthouse published an article in its November 1978 issue entitled "The Stoning of America." Written by Edward Rasen, the article concerned the emergence of marijuana trade as a multibillion dollar industry. The subtitle stated that "marijuana is now big agribusiness -- a $12 billion a year corporate growth crop." The article proceeded to report, in part, about "criminal attorneys and attorney criminals" involved in drug transactions:

The typical new dope businessman is an attorney. "We have criminal attorneys and attorney criminals," says Fred Rody, Miami DEA regional director. "There is such a thing as criminal consort. We know that some of the large smuggling operations have lawyers who are providing them with all the advice they need to operate."

However, even after DEA agents spent more than two years building an airtight case against a Mexican-American syndicate involved in the multi-million-dollar, nationwide wholesaling of marijuana, federal judges did not sentence any of the attorney criminals to prison.

Examples: Richard J. Litner, a practicing attorney in Boston, financed sales in New England and set up "cover" corporations, yet was offered the opportunity by federal judge Charles W. Joiner, without the consent of the prosecutor, to plead guilty to reduced charges. He was then placed on one-year probation so that he would not be disbarred and deprived of his livelihood. Attorney John K. Lowe of Denver and Kansas City, made a hand-to-hand sale of 400 pounds of marijuana to an undercover agent for $40,000. He received two years' probation and a $1,000 fine. As a law student, George Weingarten, now a practicing attorney in San Diego, once received a gold Rolex wristwatch as a sales reward for distributing 10,000 pounds of marijuana in one week. He became a DEA informant in exchange for a reduced sentence of one-year probation. Maria Blanca-Vargas Reid, executive director of the San Diego Mental Health Association, handled a $35,000 drug payment. Charges were dismissed in the interest of justice after she cooperated with federal authorities and revealed the whereabouts of her son, Robert Craig Chipman, and his criminal associates. Frank Marcone, an attorney from the Philadelphia area, contributed down payments of up to $25,000 on grass transactions. Charges against him were dismissed because he cooperated with further investigations. Charles Sargent Hewett, a law student from Corona Del Mar, Calif., wholesaled up to $750,000 of marijuana per week. Charges were dismissed at the request of the U.S. attorney's office for his cooperation in identifying all the people he sold to, even though he was involved in the murder of his former distributor in Boston and the attempted murder of one of his associates from San Francisco. And so on.

App. at 21a (emphasis added).

Marcone brought suit against Penthouse charging that the article libeled him since it declared that he was guilty of an offense for which he was only indicted, and since it stated that charges were dropped against him because he cooperated with the authorities. Plaintiff alleges that these two statements are untrue and that they have caused him harm and subjected him to ridicule.

Penthouse moved for summary judgment on six grounds, including that Marcone was a pubic figure and was unable to make the showing of actual malice required by New York Times and its progeny. The district court denied the motion, Marcone v. Penthouse International Ltd., 533 F. Supp. 353 (E.D. Pa. 1982), and the case proceeded to trial.

Shortly before trial, the district judge ruled that the article was libelous per se; that Marcone was not a public figure; and that Pennsylvania would adopt a negligence standard for private figures regardless of whether the article involved matters of public concern. The case was tried before a jury which returned a verdict for Marcone of $30,000 actual damages and $537,000 punitive damages. The district judge rejected Penthouse's post trial motions for judgment n.o.v. or a new trial, but ordered a remittitur reducing the punitive damages to $200,000 because he found the jury's award to be "so grossly excessive as to shock the conscience of the Court." Marcone v. Penthouse International, Ltd., 577 F. Supp. 318, 335 (E.D. Pa. 1983). Marcone accepted the remittitur on December 20, 1983, and Penthouse appealed from the final judgment, which as modified consists of $30,000 in actual damages and $200,000 in punitive damages.

II.

Although replete with First Amendment implications, a defamation suit fundamentally is a state cause of action. The parties here agree that Pennsylvania law applies. Inasmuch as Marcone is a Pennsylvania resident and any harm to his reputation that may have occurred centered in that state, the district court was correct to apply Pennsylvania law. See Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 269-70 (3d Cir. 1980); Pierce v. Capital Cities Communications, Inc., 576 F.2d 495, 501-02 (3d Cir.), cert. denied, 439 U.S. 861, 58 L. Ed. 2d 170, 99 S. Ct. 181 (1978).

An adjudication of a defamation case involves both state and federal law inquiries. A court must determine: "(1) whether the defendants have harmed the plaintiff's reputation within the meaning of state law; and (2) if so, whether the First Amendment nevertheless precludes recovery." Steaks Unlimited, 623 F.2d at 270.

Thus our initial inquiry is whether plaintiff has made a proper claim under state law. To recover in a libel action under Pennsylvania law, plaintiff has the burden of proving, when properly raised:

(1) The defamatory character of the communication.

(2) Its publication by the defendant.

(3) Its application to the plaintiff.

(4) The understanding by the recipient of its defamatory meaning.

(5) The understanding by the recipient of it as intended to be applied to the plaintiff.

(6) Special harm resulting to the plaintiff from its publication.

(7) Abuse of a conditionally privileged occasion.

42 Pa. Cons. Stat. § 8343(a) (1982); see also Corabi v. Curtis Publishing Co., 441 Pa. 432, 273 A.2d 899 (1971); Agriss v. Roadway Express, Inc., 334 Pa. Super. 295, 483 A.2d 456 (Pa. Super. 1984). Penthouse challenges Marcone's claim on several of these grounds.

A.

First, defendant contends that plaintiff has not met the burden of proving the article's defamatory character. This is so, Penthouse maintains, because the questioned remarks are incapable of defamatory meaning. Whether a statement is capable of defamatory meaning is a question the judge, as distinguished from the jury, must determine, see Franklin Music Co. v. American Broadcasting Cos., Inc., 616 F.2d 528, 540 (3d Cir. 1979); Corabi, 441 Pa. at 442, 273 A.2d at 904 (1971), and the district court ruled that the article was capable of a defamatory meaning.

According to Pennsylvania law, a statement is defamatory if it "tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Corabi, 441 Pa. at 442, 273 A.2d at 904 (quoting Cosgrove Studio and Camera Shop, Inc. v. Pane, 408 Pa. 314, 318, 182 A.2d 751, 753 (1962)). The threshold determination of whether a statement is capable of defamatory meaning depends "on the general tendency of the words to have such an effect;" no demonstration of any actual harm to reputation is necessary. Agriss, 483 A.2d at 461.

Penthouse attempts to demonstrate that each individual phrase in the article, in isolation, cannot be understood as libelous. Thus, for example, it asserts that "cooperated with further investigations" cannot be defamatory. The proper test, however, requires that the allegedly libelous communication be read as a ...


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