GTE Wins $100-Million Libel Judgment Against TV Shopping Network
In an unprecedented libel award that experts say may prompt some companies to rein in their spokesmen, a Florida jury on Wednesday awarded $100 million in damages to GTE Corp. after rejecting a claim that it supplied faulty telephone equipment to Home Shopping Network.
Following a seven-week trial and nearly five hours of deliberation, the Pinellas County Circuit Court jury found that Home Shopping Network had defamed GTE’s business reputation with a false news release stating that in one month about 50% of customer calls did not get through to the retailer’s operators.
At the same time, the jury dismissed the suit that launched the legal battle between the two companies: Home Shopping Network’s claim that problems with GTE’s phone equipment cost it $500 million in profits.
‘Will Appeal’
The jury told Home Shopping to pay a total of $20 million to GTE Corp. of Stamford, Conn., and its GTE Florida subsidiary. It also told Roy Speer, chairman of Home Shopping, and Lowell Paxson, the company’s president, to pay $40 million each to GTE and its subsidiary.
“We are very disappointed with the jury’s verdict, and we will appeal the decision immediately,” said Nando DeFilippo, general counsel for Home Shopping.
Legal experts were surprised by the award and called it by far the largest libel judgement in memory. To date, the biggest libel awards actually paid have been in the $2-million to $3-million range, and many experts believe that the GTE award will be reduced on appeal. Still, they expressed concern about a decision limiting the ability of companies to freely publicize their business activities.
“It sounds like to me the jury just went wild,” said Marc Franklin, a law professor at Stanford University in Palo Alto who recently completed a study of non-media defendants in defamation lawsuits. “The real question is what damages did GTE suffer to warrant such an award. It’s hard to think that a corporation suffered that much. It’s a lot of money.”
Franklin predicted that an appeals judge will find the award excessive and will reduce it. An appeals court could also order a retrial of the lawsuit based on some error in legal procedure at trial court or in instructions instructions given to the jury.
Claims of Blocked Calls
Another legal expert warned that the size of the award could prompt an already circumspect business community to become even more closed to the public and the media.
“Libel suits not only endanger the press’ freedom but the ability of ordinary people to talk to one another,” said Robert D. Sack, a leading libel lawyer in New York. “It’s hard enough for the public to get information from businesses as it is. . . . This is going to make them more afraid to talk.”
The case stems from a lawsuit Home Shopping filed in September, 1987, charging that GTE supplied faulty equipment that blocked millions of calls to the network, which pioneered shop-at-home television enabling viewers to phone in orders for merchandise.
Home Shopping claimed that GTE misrepresented the capabilities of its equipment and that GTE didn’t provide adequate service. Home Shopping said in its lawsuit that “as a direct result” it suffered “substantial harm to its business reputation and credibility and has lost profits in excess of $500 million.”
In November, 1988, GTE countersued, accusing Home Shopping of defaming its business character and of covering up its financial problems by blaming GTE.
The suit said the “blame-GTE campaign” was fully launched in April, 1987, when Home Shopping issued a news release falsely stating that in the previous month it learned that “approximately 50% of customer calls did not get through to HSN’s operators.”
A public relations industry leader expressed concern Wednesday that the case could prompt companies to clamp down on public relations specialists, who are often hired by companies to help write news releases.
“People will be very cautious when they issue news releases from now on,” said Jerry Dalton, manager of corporate communications for LTV Corp. in Dallas and president-elect of the New York-based Public Relations Society of America. But he pointed out that Home Shopping’s top executives were found to have authorized the defamatory news release.
“I hope companies don’t just blame this case on public relations people,” Dalton said.
