Court Reinstates Washington Post Libel Conviction

A sharply split federal appeals court panel Tuesday reinstated a jury’s libel verdict against the Washington Post, ruling that there was “clear and convincing” evidence that the newspaper libeled the former president of Mobil Oil Corp. in an article published in 1979.

In a 2-1 decision, the appeals panel held that a federal district judge had erred when he ruled that there was not enough proof to hold the newspaper liable for the story, which said that William P. Tavoulareas had misused his position and the corporation’s money to “set up” his son Peter in the shipping business.

The appellate panel, in a 101-page majority opinion, said that its own review showed sufficient evidence to support the jury’s finding that the article was false and defamatory and was published with “actual malice”--that is, with the knowledge that it was false or with reckless disregard for the truth.

The three-judge panel sent the case back to the trial court to consider whether the damage award, set by the jury at $2.05 million, should be reduced or set aside. Meanwhile, the Post said that it plans to appeal Tuesday’s decision to the full 11-member appellate court and, if necessary, to the U.S. Supreme Court.

The ruling came as a surprise in a widely watched case that pitted the head of the nation’s second largest oil company against one of the country’s most influential news publications. The decision ran counter to a recent trend in libel cases in which news media defendants, although usually losing at trial, have won more often on appeal than plaintiffs.

Judge George A. MacKinnon, joined by Judge Antonin Scalia, cited a wide variety of evidence that he said could support the jury’s verdict against the Post. They said that, among other things, the paper “deliberately slanted, rejected and ignored” evidence contrary to the theme of its story, that “substantial doubts” about the story circulated in the Post’s newsroom and that the paper “steadfastly refused” to retract the story or even to print a letter from Tavoulareas in its letters-to-the-editor column.

In a vigorous 49-page dissent, Judge J. Skelly Wright accused the court majority of “no less than an ambitious, wide-ranging revision” of libel law that would “vastly increase” journalistic liability in stories involving public figures like Tavoulareas.

“If this excessive jury verdict on these mundane, flimsy facts is upheld, the effect on freedom of expression will be incalculable,” Wright said. “The message to the media will be unmistakable--steer clear of unpleasant news stories and comments about interests like Mobil or pay the price.”

Story Published in 1979

The story, written by reporter Patrick Tyler, was published on Nov. 30, 1979. The detailed, 85-paragraph article said that the elder Tavoulareas “set up” his son in 1974 as a partner in a London-based shipping management firm that had since done millions of dollars in business in operating Mobil-owned ships under exclusive, no-bid contracts.

Tavoulareas denied the story as false and demanded a retraction. The paper refused, standing by the story as true. The libel suit was then filed, and, in 1982, a six-member federal jury, after three days of deliberation, returned a verdict against the paper and its reporter.

Judge Overturned Verdict

In 1983, U.S. District Judge Oliver Gasch overturned the jury verdict. “The article in question falls far short of being a model of fair, unbiased, investigative journalism,” Gasch wrote. “There is no evidence in the record, however, to show that it contained knowing lies or statements made in reckless disregard of the truth.”

The key question on appeal was whether there was sufficient evidence for the jury to find that the paper had published the story with “actual malice.” The appellate panel majority concluded that there was.

MacKinnon said that the use of the term “set up” and the article as a whole defamed the senior Tavoulareas. Most readers, he said, would conclude that the executive was “guilty of corporate nepotism, breached his fiduciary duty to Mobil and misused Mobil assets.”

MacKinnon noted also that, although the paper had not been under the pressure of producing a fast-breaking news story, the article contained misstatements. In addition, he said, the paper had relied on “sources of questionable credibility” for major parts of the story.

Boisfeuillet Jones Jr., the Post’s general counsel, said: “We were very surprised and disappointed, but this is not the end of the road.”

Bradlee Won’t Comment

The paper’s executive editor, Benjamin C. Bradlee, refused to comment.

In New York, Mobil Oil executives issued a statement from Tavoulareas that praised the ruling.

“I have felt from the beginning that the Post either knew the story was false or published it with reckless disregard for whether it was true or false,” he said. “I think this decision will make for a more responsible press.”

Tavoulareas retired as president of the corporation in 1984 but, a spokesman said, still serves as a director and member of its executive committee.