Vacates Reinstatement of $2-Million Judgment to Ex-Mobil Chief : Court to Reconsider Libel Award Against Post

The full U.S. Court of Appeals agreed Tuesday to reconsider a decision to reinstate a $2-million award to former Mobil Corp. President William Tavoulareas in his libel suit against the Washington Post.

The court voted 7 to 2, with Judges Edward Allen Tamm and Antonin Scalia dissenting, to rehear the case. Judge Robert H. Bork did not participate in the decision.

Court in Recess

No date was scheduled for the rehearing. The court is in recess and will not hear cases again until September.

On April 9, a three-member appeals panel, in a 2-1 decision written by Senior Judge George E. MacKinnon, ruled that a 1979 article published by the Post about Tavoulareas’ business dealings contained false statements and that “the evidence was sufficient to demonstrate that the article was published in reckless disregard of its falsity.”

The panel ruled also that U.S. District Judge Oliver Gasch’s overturning two years ago of a federal court jury’s decision against the Post, reached after a 21-day trial in mid-1982, had been “inappropriate” and “improper.”

The full court, in a two-page order Tuesday that offered no grounds for its decision to rehear the case, vacated the appellate panel’s April ruling. In addition, the court overturned a 2-1 decision in which the same appeals panel denied a rehearing.

Judge Defends Decision

On Tuesday, MacKinnon defended the panel’s April 9 decision by saying that the Post “presented a weak defense highlighted by the complete failure to present one bit of the deposed testimony of the principal source they allegedly relied upon for the story.”

“Their whole defense was dependent upon the credibility of their few witnesses, which the jury obviously did not believe--and the jury was not required to believe them, because their testimony in its critical aspects was specifically contradicted by plaintiff’s witnesses, which we find were reasonably believable.”

MacKinnon added that “this is a case where the record demonstrates that a properly instructed jury found liability, that clear and convincing evidence supports its verdict so far as liability is concerned and that it was improper for the trial court to reweigh the jury’s findings on credibility.”

In a telephone interview, the Post’s general counsel, Boisfeuillet Jones Jr., said: “We’re obviously relieved that the full court will take a fresh look at the record in the case. We’re also relieved that the majority opinion by the panel has been wiped off the books because we thought it was a bad opinion. We agreed with the trial judge that there was no evidence of malice.”

Action ‘Not Surprising’

Tavoulareas, in a statement issued through Mobil headquarters in New York, said: “In a case of this importance, it is not surprising that the full court would want to hear it.”

John J. Walsh, Tavoulareas’ chief lawyer, said: “We are confident we can convince a majority of the full court that the decision of the three-judge panel was correct.”