On certification to the Superior Court, Appellate Division, whose opinion is reported at 269 N.J. Super. 370 (1994).
The opinion of the Court was delivered by Garibaldi, J. Chief Justice Wilentz and Justices Handler, and Stein join in this opinion. Justice Pollock has filed a separate Concurring opinion in which Justice O'Hern joins. Justice Coleman did not participate.
The opinion of the court was delivered by: Garibaldi
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
TURF LAWNMOWER REPAIR, INC. V. BERGEN RECORD CORPORATION, ET ALS (A-27-94)
Argued October 24, 1994 -- Decided March 15, 1995
Garibaldi, J., writing for the Court.
On Sunday, August 21, 1988, The Record published a special report by its Special Investigative News Editor and staff writer, Bruce Locklin that accused Turf Lawn Mower Repair, Inc., (Turf) and its owner and president, John L. Gloria, of deceptive business practices that "ripped-off" customers. Locklin quoted former employees, former customers and a competitor to demonstrate and support the allegations of deceptive business practices at Turf. Readers of Locklin's articles were informed that customers paid for more than they received, that Turf used old parts but charged customers for new parts, and that customers were charged for work that was never done. Locklin's article also described three independent tests conducted by The Record, in which Turf recommended or performed unnecessary work.
On January 10, 1989, Gloria and Turf (collectively, plaintiffs) filed suit against The Bergen Record Corporation, which publishes The Record and The Sunday Record; the papers' editor, the publisher, Locklin, and Mary Anne DeMarco, an investigative researcher (collectively, defendants), alleging that: defendants had committed libel by maliciously publishing a news article about plaintiffs; defendants had slandered plaintiffs by quoting Turf's former employees who made false and malicious statements to injure plaintiffs' good name; and defendants intentionally interfered with plaintiffs' prospective business advantage (loss of prospective customers and income) and Gloria had suffered mental anxiety, emotional distress, and embarrassment as a result of the alleged tortious conduct of defendants.
At the Conclusion of discovery, defendants moved for summary judgment, contending that plaintiffs had failed to demonstrate that defendants acted with actual malice in publishing the investigative report. The trial court applied the actual-malice standard of proof because plaintiffs had conceded its applicability, and granted the motion, finding that plaintiffs failed to raise a genuine issue of actual malice. The Appellate Division affirmed the grant of summary judgment to defendants, finding that the sale of lawn mowers is a subject of legitimate public interest and, thus, the actual-malice standard applied. The Concurring Judge found that because plaintiffs had conceded the applicability of that standard, it was unnecessary to determine whether Turf's business involved a matter of legitimate public interest.
The Supreme court granted plaintiffs' petition for certification to determine the appropriate standard of proof for businesses in a defamation action.
HELD: In a defamation action, the negligence standard applies to businesses involved with an everyday product or service, whose practices do not constitute consumer fraud, impinge on the health and safety of New Jersey citizens, or comprise activity within a highly-regulated industry. However, to protect the public interest and the press, an actual-malice standard of proof will be imposed on an ordinary business when the media's allegations of consumer fraud, if true, would constitute a violation of the Consumer Fraud Act.
1. The public-policy considerations behind the actual-malice standard demonstrate that courts should not impose such a standard on every business. Nor has it been demonstrated that the failure to apply that heightened standard on businesses will have a chilling effect on the press. (pp. 10-14)
2. In defamation actions brought by a private person, the actual-malice standard is applied in order to protect speech that affects the health and safety of the public, or involves a highly regulated industry. That heightened standard, however, was never intended to extend to all consumer investigative reporting. While the actual malice standard should continue to apply to businesses that are of inherent public concern, it should not apply to businesses whose products or services do not intrinsically involve a legitimate public interest, such as a business that sells and repairs lawn mowers. (pp. 14-25)
3. Ordinary businesses are neither traditional public figures nor do they engage in activities that constitute traditional matters of public concern. As such, the negligence standard best balances the interests of the public in preserving an uninhibited, robust, and free press and the interests of a private individual and a business in preserving their reputation and good name. Of course, the public has a legitimate interest in any business charged with criminal fraud, a substantial regulatory violation, or consumer fraud that raises a matter of legitimate public concern. In those instances, the actual-malice standard will apply, regardless of the type of business involved. Here, Turfs business would trigger the negligence standard, unless the acts alleged by The Record constitute consumer fraud that raises a matter of legitimate public concern. (pp. 25-28)
4. What constitutes consumer fraud depends generally on whether the alleged activities of the business would be actionable under the Consumer Fraud Act (Act). If the court determines that substantially all the allegations set forth in the article, if true, would support a consumer fraud complaint, then the actual-malice standard will apply. To constitute consumer fraud sufficient to trigger the heightened standard, the business practice in question must be "misleading" and stand outside the norm of reasonable business practice in that it will victimize the average consumer, and thus directly involve a matter of legitimate public concern. The actual-malice standard applies if the article read as a whole and drawing all reasonable and normal inferences, describes conduct that would lead an average reader to conclude that the owner engaged in business practices that were unconscionable, misleading, deceptive, and reflecting bad faith. (pp.31-34)
5. Locklin's accurate reporting of interviews with customers who had filed complaints with the Better Business Bureau, except for the Clansky interview, illustrate only bad employee attitude and discourtesy, sloppy business practices, and poor business judgment. Locklin's failure to disclose in the article that the four former employees he interviewed had been fired casts doubt on his use of their statements to support allegations of consumer fraud. Moreover, the statements made by Turfs competitor offer some corroborative evidence that Turfs conduct constituted consumer fraud but would not, alone, support a consumer fraud claim. However, Locklin's reporting of Turfs conduct during the second and third tests could lead an average reader to conclude that Turfs business practices were misleading, deceptive, and in violation of the Act. Turfs rebuilding of the carburetor in a mower that was in good condition and the installation of new points in a machine that did not need points, in conjunction with the second test, is conduct sufficient to support a claim that Turf committed consumer fraud under the Act. (pp. 3542)
6. Because Locklin's article described sufficient uncontradicted assertions of Turfs conduct that, if true, would support a claim of consumer fraud, actual malice was the appropriate standard for summary judgment. In this case, summary judgment was properly granted because plaintiffs failed to establish by clear and convincing evidence that defendants published the article either with knowledge that the statements were false or with reckless disregard of whether they were false. Thus, plaintiffs failed to prove that Locklin demonstrated actual malice in his reporting. (pp. 4245)
The Court AFFIRMS the judgment of the Appellate Division and the trial court's order granting defendants' motion for summary judgment for the reasons expressed in this opinion.
POLLOCK, J., Concurring, in which JUSTICE O'HERN joins, agrees with the majority that the Bergen Record did not publish either with knowledge that the facts in the subject articles were false or with reckless disregard for the truth or falsity of those facts. However, unlike the majority, Justice Pollock would stop there because he believes the majority opinion points in too many directions to be followed unquestioningly.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER and STEIN join in JUSTICE GARIBALDI'S opinion. JUSTICE POLLOCK filed a separate Concurring opinion in which JUSTICE O'HERN joins. JUSTICE COLEMAN did not participate.
This defamation appeal involves two newspaper articles that accused plaintiffs, Turf Lawnmower Repair, Inc., (Turf) and its owner and president, John L. Gloria, of deceptive business practices that "ripped off" customers. In this appeal we determine whether actual malice is the appropriate standard for all businesses, or whether negligence is the more appropriate standard of proof in defamation actions that involve businesses whose activities do not concern matters of public health or safety, do not constitute consumer fraud, or whose businesses are not subject to substantial government regulations.
On Sunday, August 21, 1988, The Record published a special report by its Special Investigative News Editor and staff writer, Bruce Locklin, entitled, "A clip joint for lawn mowers, Tests, ex-workers reveal Teaneck shop deceives, overcharges." A subarticle entitled "Looking for honesty with a faulty machine" accompanied the lead article.
The lead article's author was Locklin, who characterized Gloria, the owner of Turf Lawn Mower Repair, as "fiercely ambitious." "He set out to become a millionaire by age 30 and later run for Congress." Locklin also reported that Gloria, then age twenty-nine, had made his first million. Locklin then wrote:
But his success is flawed. Though his shop did about 12,000 repair jobs in the past three years, former employees estimate that 60 percent to 80 percent were rip-offs.
Most customers who paid for tune-ups got little more than an oil change and a new spark plug -- for which they typically were overcharged $20 to $30. Some paid for new parts and got used parts from junked mowers. Many were charged for repair work that was never done.
Independent tests conducted by The Record produced similar results. Reporters brought in mowers in need of simple repairs. Each time, Turf recommended or performed unnecessary work.
Locklin continued, quoting former customers, former employees, and a competitor:
There's a pervasive rudeness at Turf, where employees often add insult to injury. One customer, Andrea Daglezt of Bogota, said the man behind the counter talked to her as if she were an idiot. "That guy almost had my fist down his throat," she said. "He was so nasty. . . ."
Winners is a former Turf mechanic who stayed on for about a year after Gloria became boss.
"When he worked for Bob, he was a nice guy. As soon as he took over, everything changed," Winners said. "I ended up quitting because . . . I was tired of customers getting ripped off."
Winners said Gloria made bogus tuneups standard procedure. No longer did mechanics routinely install new points and condensers or rebuild carburetors by replacing worn parts.
Instead, the mowers got nothing more than fresh oil, a spark plug, and a quick cleanup. Labor time dropped from 30 or 40 minutes per mower to about 5 minutes.
Three other former mechanics, who each worked at Turf for about two years during the 1980-86 period, said they had the same instructions: Do the fake tuneups -- but at full tuneup prices.
Mowers often broke down later in the season, the mechanics said, generating more repair work and opportunities to sell new mowers.
Bob Vroeninday, 27, now an auto mechanic in Ridgefield Park, said that when he was working for Turf in 1982 and 1983, Gloria used parts from junked mowers for repair work -- without telling customers.
"On a cracked flywheel, he'd use an old one and charge you for a new one because that stuff you can't see," Vroeninday said.
Winners and Vroeninday said Gloria often lied to customers who brought in mowers that had jammed after hitting something solid. He would say the mower's crankshaft needed to be straightened when, in fact, the machine needed only a small part called a keyway. Its price? About $1.
"A job that should have cost $20 would cost about $90," Vroeninday said.
If a customer spotted a rip-off and complained, Gloria blamed his workers.
Doug Livingston, a Turf mechanic from 1984 to 1986, recalled how Gloria tried to make him the scapegoat to appease an angry customer. "He immediately turned around and pointed at me and said, 'This is the guy who worked on it. It's not my fault he didn't do his job.'"
Livingston, who now works at a Fair Lawn shop, said Gloria sometimes got vindictive if a customer became impatient. "He would get mad at him and just kick the machine in the back and say, 'Don't touch that for a week.'"
One customer got sick of being told "we're working on it" for more than a month. Ron Broking, who owns Ronnie's Restaurant in Palisades Park, went around back and found his mower untouched.
"It never, never got looked at," Broking said. "That's what burned me up because it was a lie." Broking packed his mower in his car and took it to another shop.
Mel Clansky of New Milford had a tougher time of it. He paid Turf $54 to fix his electric mower. But when he took it home, it still didn't work. Clansky took it back to Turf and, while waiting, bought a new machine for $150. Turf called and wanted $200 to repair the old machine.
Clansky just wanted the mower returned, but Turf couldn't find it. He gave up in disgust.
"I wasn't going to bother taking the time off to go to small claims court," Clansky said. "It was unbelievable."
After these lengthy assertions, Locklin commented on The Record's tests:
Tests conducted by The Record produced evidence of systematic rip-offs at Turf. Reporters took mowers there three times. Turf employees misdiagnosed problems, recommended work that wasn't needed and charged for work that wasn't done. . . .
The Record's tests at Turf started in June with a Lawnboy machine that needed carburetor repair. Turf kept the machine three weeks, charged a $20 diagnostic fee, and said it couldn't be fixed.
A Turf salesman offered to take the $20 off the price of a new mower, saying that even the manufacturer couldn't fix the Lawnboy. He pointed to Turf's standard tuneup price and ...