$2-Million Libel Award Upset in D.C. : Appeals Court Upholds Washington Post Story on Ex-Mobil Chief

A federal appeals court today threw out a jury’s $2-million verdict against the Washington Post for libeling former Mobil Oil President William Tavoulareas in a 1979 story about his business dealings.

The U.S. Circuit Court of Appeals for the District of Columbia, on a 7-1 vote, said a federal judge was right when he found that there was insufficient evidence to support the libel award.

The opinion by Judges Kenneth Starr and Skelly Wright concluded that the article in question was “substantially true” and that there was “insufficient evidence” in the record to support a finding that the newspaper acted with malice.

Scalia Decision

The action by the full court reverses a three-judge panel, which ruled 2 to 1 in April, 1985, that the newspaper showed reckless disregard for the truth when it accused Tavoulareas of setting up his son in business.

The panel ruling by Judges George MacKinnon and Antonin Scalia, now a Supreme Court justice, quickly was accepted for review by the full court. It also was widely criticized by news media lawyers for its holding that modern-day investigative reporting techniques could be evidence of libel.

Because of Scalia’s new position, he could not participate in today’s ruling from which MacKinnon dissented.

The libel suit stemmed from a Nov. 30, 1979, article written by reporter Patrick Tyler. The story said Tavoulareas used his influence so his son, Peter, would become a partner in the London business, Atlas Maritime Co., which operated some of Mobil’s ships. Peter previously had worked as a shipping clerk making $14,000 a year.

The article also hinted that Tavoulareas and Mobil may have violated securities law by failing to disclose the younger Tavoulareas’ involvement in the company.

After the first publication, Tavoulareas denied the story and demanded a retraction by Post editors. The Post refused and insisted the “story was, in fact, true.”

Punitive Damages Awarded

The Tavoulareases then sued the newspaper for libel. After a trial, the jury found that the newspaper story defamed Tavoulareas and awarded him $250,000 in compensatory damages and $1.8 million in punitive damages.

The trial judge, however, threw out the jury decision, saying there was no proof that the defendants had acted with actual malice.

Under libel law, a public official seeking damages must prove by clear and convincing evidence that information was published with “actual malice” or “reckless disregard” for the truth.