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Schiavone Construction Co. v. Time Inc.

May 25, 1984

SCHIAVONE CONSTRUCTION CO. AND RONALD A. SCHIAVONE, INDIVIDUALLY
v.
TIME, INC. SCHIAVONE CONSTRUCTION COMPANY AND RONALD A. SCHIAVONE, APPELLANTS



Appeal from the United States District Court for the District of New Jersey.

Aldisert, Weis and Rosenn, Circuit Judges.

Author: Aldisert

Opinion OF THE COURT

ALDISERT, Circuit Judge:

In this appeal from a dismissal of plaintiff-appellants' complaint under Rule 2(b)(6) of the Federal Rules of Civil Procedure, we are asked to decide whether the complaint made out a sufficient claim for relief against Time, Inc. under New Jersey defamation law. Because we conclude that the district court erred in determining that New Jersey's fair report privilege barred plaintiff-appellants' claim as a matter of law, we reverse the judgment of the district court, 569 F. Supp. 614, and remand for further factual proceedings.

I.

In January 1981, President Ronald Reagan nominated Raymond J. Donovan, a former labor negotiator for Schiavone Construction Company, to be his Secretary of Labor. The United States Senate confirmed the appointment, relying on information provided to it by the Federal Bureau of Investigation. Later in 1981, in response to allegations that Donovan and Schiavone Construction Company were linked to organized crime, Attorney General William French Smith named Special Prosecutor, Leon A. Silverman, to investigate the matter. On June 26, 1982, Silverman issued his first report, in which he concluded that there was insufficient evidence to support a prosecution of Donovan. New allegations surfaced shortly thereafter, however, and Silverman was forced to reopen the investigation. On August 23, 1982, in an article titled "JURY STILL OUT/Donovan probe is reopened," Time magazine reported:

The FBI faces some tough questioning of its own. The Senate Labor Committee is investigating the bureau's handling of Donovan's confirmation probe 18 months ago. The personal files of FBI Director William Webster, forwarded to the committee last month, reveal that the name of Schiavone appeared several times in the bureau's reports on the 1975 disappearance of former Teamster Boss Jimmy Hoffa. That detail would surely have intrigued both the Senate committee that approved Donovan's nomination in February 1981, and the special prosecutor this year. But neither learned about it until last month.

App. at 6a.

On September 10, 1982, Silverman issued a supplemenatal report in which he concluded, as he had in the first report, that there was insufficient evidence to support a prosecution of Donovan. He based his conclusion in large part on a memorandum of December 15, 1980 from F.B.I. Director William Webster to then Executive Assistant F.B.I. Director Francis M. Mullen, Jr. -- the same memorandum included in the "personal files of F.B.I. Director William Webster" referred to by Time in its article about the investigation. The memorandum describes Webster's response to an inquiry by Edwin Meese on the bureau's Donovan investigation. As quoted in the supplemental report, the Webster memorandum provides:

we had reviewed all our indices and had checked with all field offices and nothing negative had been disclosed. I advised that a company, Chivone (PH), in which he [Donovan] apparently had a very substantial interest, had appeared a number of times in reports in our HOFEX [sic: Hoffex] case, but that none of these suggested any criminality or organized crime associations.

App. at 54a-55a (emphasis added). Silverman also based his conclusion about Donovan on a conversation he had with Webster on August 13, 1982 that indicated that the Webster memorandum contained inaccurate information. That conversation, as relayed by Silverman in his supplemental report, provides:

With respect to the December 15, 1980, memorandum, Director Webster stated that the Hoffex reference is incorrect -- that, at the time of the December 12, 1980, communications, the Hoffex files had not been checked. Moreover, the Director stated that files had recently been checked and it was determined that there were no references to [Schiavone Construction Company] therein.

The Director attributed that erroneous Hoffex reference to information which he received from certain subordinates. He was undertain as to which of the subordinates provided it. He stated that he did not know where he would independently come up with the Hoffex reference ...


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