Judge Dismisses Papers’ Counterclaim Against Laxalt

A federal judge has dismissed McClatchy Newspapers’ $6-million counterclaim in the $250-million libel suit between McClatchy and Sen. Paul Laxalt (R-Nev.), according to court documents made public Tuesday.

Some newspaper executives had hoped that the claim against Laxalt would show other news organizations a way to discourage libel suits. But the judge’s decision deals an apparent setback to such hopes.

Laxalt, a close friend of President Reagan, sued McClatchy Newspapers in September, 1984, over a November, 1983, Sacramento Bee story alleging that employees at a Carson City casino illegally skimmed profits from gaming tables there during a time that Laxalt and his brother owned the casino.

The story also suggested that Internal Revenue Service agents discovered the skimming scheme but stopped investigating it because of political pressure from the Nixon White House. The story also explored alleged associations between Laxalt and persons whom the article said had ties to organized crime.

Networks Drop Story

Two months before last year’s presidential election, in which Laxalt was Reagan’s campaign chairman, the CBS and ABC television networks were working on similar stories about Laxalt but canceled them after the senator and his lawyer told them that he was filing the lawsuit.

The McClatchy Newspapers suit argued that Laxalt’s libel charge was an abuse of the legal process designed mostly to suppress unfavorable stories about him during an election year. The countersuit also argued that Laxalt abused his power as a U.S. senator to intimidate news people and to extract favorable letters from the FBI and other Justice Department officials about events surrounding his casino ownership.

U.S. District Judge Edward Reed in Reno rejected the McClatchy newspapers’ arguments on their merits, ruling that there was no evidence that Laxalt’s suit was insincere. He also rejected arguments that Laxalt abused his office in his efforts to win a retraction from the Bee or persuade other news organizations not to write stories.

C. K. McClatchy and his attorney, Linda Shostak, said they had not read Reed’s ruling late Tuesday and would not comment. They also said they did not know whether they would appeal the ruling to the 9th Circuit Court of Appeals or again file the counterclaim if Laxalt ultimately loses his libel suit.

Laxalt attorney Richard Davenport was unavailable for comment.

The ruling, however, would seem to be a blow to libel attorneys who earlier this year had hailed the McClatchy counterclaim as perhaps the start of a trend. Some, such as David Kendall, a libel attorney who works for such clients as the Washington Post, said he thought the McClatchy counterclaim might succeed because there was documented evidence that Laxalt had acted to stop press coverage about him, beyond just filing the lawsuit.

“The most serious question arising from Laxalt’s action is whether the threat of lawsuits demanding absurdly large damages can indeed inhibit” news organizations from “providing information to which the public is entitled,” C. K. McClatchy wrote in discussing the libel suit.

Laxalt’s attorney’s countered in court: McClatchy’s counterclaim, they said, is a “frivolous and silly . . . sideshow . . . akin to a rapist suing his victim.”

McClatchy did prevail in another pretrial ruling. The judge dismissed a Laxalt motion that Bee editors, reporters and officers had engaged in a civil conspiracy against him on the grounds that all those defendants worked for one company.

The case remains in the pretrial discovery stage. That phase is scheduled to end in February, although McClatchy attorneys may ask for more time.