On Appeal From The United States District Court For The Eastern District of Pennsylvania; D.C. Civ. No. 89-02679.
Becker, Nygaard and Alito, Circuit Judges.
These appeals, from various injunctive orders and a damages judgment of the district court for the Eastern District of Pennsylvania in a bizarre libel case founded upon our diversity jurisdiction, present the interesting question under Pennsylvania law of the ability of a judge to enjoin future libels and to compel the retraction of past libels. For the reasons that follow, we will reverse the district court's orders enjoining defendant/appellant Richard Thompson from publishing further libels against plaintiff/appellee Steven M. Kramer, his former lawyer, and ordering Thompson to retract past libelous statements. The judgment awarding damages will be reversed and remanded for a new trial on damages for the reasons set forth in a companion opinion filed this day.
I. FACTS AND PROCEDURAL HISTORY
The parties' relationship began in July 1982, when Thompson retained Kramer to bring a securities fraud claim against Thompson's former broker, Prudential-Bache, Inc. No question was raised by Thompson concerning Kramer's stewardship for the next three years. Indeed, during this time, Thompson wrote on several occasions praising Kramer's performance.*fn1 Then, in the fall of 1985, Kramer was contacted by an F.B.I. agent to whom Thompson previously had complained about his investment losses at Prudential-Bache. The agent asked Kramer whether the stocks at issue were completely worthless. Kramer responded that Thompson had purchased the stocks for roughly $120,000 and later had sold them for approximately $15,000. Thus, while informing the agent that Thompson had suffered a very substantial loss, Kramer also informed the agent that technically the stocks were not worthless. When Thompson learned of this conversation, however, he became enraged, and accused Kramer of deliberately dissuading the F.B.I. from investigating the matter. The parties' relationship deteriorated rapidly thereafter and, in October 1985, Thompson discharged Kramer as his counsel.
Seeking to ensure that he ultimately would be compensated for his services, Kramer refused to return the case files to Thompson until the latter agreed to deposit the proceeds of any future judgment or settlement with the court pending resolution of the attorney's fees issue. Thompson would not agree, and Kramer secured an order from the district court which provided that any funds recovered would be placed in escrow, and that the fee dispute would be arbitrated. Kramer then made the case files available to Thompson and his new counsel.
On February 4, 1986, Thompson wrote to the Disciplinary Board of the Pennsylvania Supreme Court (the "Disciplinary Board") alleging that Kramer had failed to represent him effectively in the Prudential-Bache action.*fn2 At about the same time, Thompson began writing a series of critical and accusatory letters about Kramer to various private attorneys, federal judges, F.B.I. agents, federal and state prosecutors, newspapers, and television stations in the Philadelphia area.*fn3 With varying degrees of repetition, these letters alleged that Kramer: (1) had "thrown" Thompson's case; (2) had deliberately destroyed certain documents related to the case; (3) had used drugs and was a member of the highly publicized "Yuppie Drug Ring" organized by Philadelphia dentist Lawrence Lavin;*fn4 (4) was connected to organized crime; and (5) had committed arson on his own car. Kramer demanded a retraction, but Thompson refused.
Kramer thereupon brought a libel action against Thompson in the Court of Common Pleas of Philadelphia County. Undaunted by Kramer's suit, Thompson continued his letter-writing campaign. The court eventually entered a default judgment on the issue of liability against Thompson for failure to comply with discovery.
After the default judgment was entered against him, Thompson ceased to write critically about Kramer for approximately two years. In early 1989, however, Thompson became aware of a suit filed by Kramer in federal district court against Mano Arco, a garage that had performed repair work on Kramer's car. Kramer's suit alleged that Mano Arco's negligent workmanship had been responsible for the fire that engulfed his car while it was travelling on the New Jersey Turnpike. Thompson took it upon himself to contact, first by phone and then by letter, the lawyer for Mano Arco. After informing the lawyer of his view that Kramer had committed arson on his own car, Thompson resumed his accusations that Kramer had thrown Thompson's securities fraud case, and that he was involved in the Yuppie Drug Ring and the underworld. Thompson's letter to Mano Arco's attorney purported to be copied to the state Disciplinary Board, the federal judge hearing the case, The Philadelphia Inquirer, the United States Justice Department, and Kramer.
Kramer then filed the instant libel action in the United States District Court for the Eastern District of Pennsylvania, alleging diversity of citizenship.*fn5 Thompson filed an answer, naming thirteen third-party defendants and asserting counterclaims for libel and slander, legal malpractice, obstruction of justice, malicious prosecution, and civil RICO violations. The district court later dismissed the third-party defendants and the counterclaims, and imposed sanctions on Thompson with respect to one of the third-party defendants.
Trial commenced on April 2, 1990.*fn6 Having determined that Thompson's statements were per se libelous in that they were false and made in reckless disregard of their truth or falsity, the court directed a verdict for Kramer at the close of Kramer's case -- i.e., without hearing Thompson's defense on the issue of liability. The court restricted the scope of Thompson's case to evidence relevant to the calculation of compensatory and punitive damages. Heeding the court's suggestion that his only hope for mitigating damages was to demonstrate contrition, Thompson took the witness stand, delivered a grudging and rambling apology, and promised not to publish future defamatory statements. Kramer cross-examined Thompson, challenging the sincerity of his apology, and Thompson rested.
After closing arguments, the court instructed the jury to award damages based only on those libelous statements issued between the filing of the state court action in February of 1986 and the filing of the federal court action in April of 1989, and to render its verdict in the form of special interrogatories on compensatory and punitive damages. During its deliberations, the jury inquired whether it also could require Thompson to send a letter of retraction to all persons who had received the libelous communications. The court responded that it was inappropriate for the jury to do so, but assured the jury that the court would require Thompson to issue a retraction, in addition to whatever damages were awarded.
The jury ultimately awarded Kramer $100,000 in compensatory and $38,000 in punitive damages, and the district court entered judgment accordingly on April 10, 1990. The court simultaneously entered a permanent injunction, prohibiting Thompson from making further statements about Kramer of the type adjudged libelous, and ordering him to write letters of retraction to all persons who had received prior libelous communications.*fn7 Thompson's post-trial motions for judgment n.o.v. and for a new trial were denied. Thompson filed a timely notice of appeal (No. 90-1488).
After learning that Thompson had failed to send all the retraction letters required by the court's permanent injunction, Kramer moved to hold Thompson in contempt of court. Although declining to hold Thompson in civil contempt, the district court, inter alia, again ordered him to make the appropriate retractions.*fn8
Shortly thereafter, Thompson submitted a petition, which he later amended, seeking leave to appear as amicus curiae in the case of Matthews v. Freedman, Appeal No. 89-2112, then pending before this court. Matthews involved an appeal by Kramer of sanctions imposed on him by a district court in a matter unrelated to his litigation with Thompson. Thompson's petition contained renewed accusations that Kramer had "thrown" his case, was associated with the Yuppie Drug Ring, and generally was guilty of perjury, forgery, fraud, and extortion. In the petition, Thompson also repudiated the prior retraction letter that the district court had "forced" him to write. Thompson sent copies of his petition to the Disciplinary Board, U.S. Attorney's Office, F.B.I., I.R.S., and lawyers associated with the Matthews case.
Kramer filed a second motion to hold Thompson in contempt. This time, the district court declared Thompson in civil contempt of the permanent injunction, and ordered that he be confined and fined $500 per day until he purged himself of contempt by withdrawing all statements and court filings related to the Matthews case. Thompson then drafted, and the court edited and approved, the required letter of withdrawal. The court also ordered Thompson to advise the Clerk of this court, in regard to the instant appeal, that he had "admitted under oath in the trial of this matter that he defamed Steven Kramer and promised the jury, before verdict, that he apologized and would not in the future make such statements as were accused as defamatory by plaintiff."
On August 24, 1990, the district court entered an expanded injunction prohibiting Thompson from contacting any person with whom Kramer conducts his business. Thompson filed a second notice of appeal with this court (No. 90-1640), which was consolidated with Thompson's pending appeal. We granted expedited argument, but refused Thompson's motion to stay enforcement of the injunction pending disposition of his appeal.*fn9 After hearing argument, however, we stayed enforcement of the injunction, pending that disposition.*fn10
Thompson appeals from a variety of orders of the district court, raising numerous allegations of error. We consider most of these in our companion memorandum opinion filed this day.*fn11 We will limit our inquiry in this opinion to the challenges to the permanent injunction entered by the district court against Thompson after trial and to that injunction's subsequent enforcement and expansion.
As discussed above, this injunction essentially provided Kramer with two forms of equitable relief, in addition to the $138,000 in damages awarded by the jury. First, the court, threatening civil contempt, enjoined Thompson initially from issuing new statements of the type found libelous, and ultimately from contacting anyone with whom Kramer does business. Second, the injunction required Thompson to retract or withdraw various previously issued libelous statements and court filings. Thompson argues that the permanent injunction thus had the effect of "prohibiting and mandating" speech in violation of the First Amendment to the United States Constitution and Article I, section 7 of the Pennsylvania Constitution. We will consider separately Thompson's challenges to the prohibitory injunction and to the retraction order.
A. Injunction Against Further Defamatory Statements
It is axiomatic in this diversity case that the injunction cannot stand if it contravenes either the United States or Pennsylvania Constitutions. Because Thompson presses his claim principally by reference to the Pennsylvania Constitution, we will begin our analysis there. In light of our conclusion that the Pennsylvania Constitution does prohibit a judge from enjoing future libelous speech, we do not need to consider its federal analog.
Thompson relies primarily upon Willing v. Mazzocone, 482 Pa. 377, 393 A.2d 1155 (1978), which he argues is on all fours with the instant dispute, and which stands for the proposition that the Pennsylvania Constitution does not tolerate an injunction against libelous speech. Although we ultimately conclude that Willing differs in important respects from the instant dispute, the factual and legal contours of the two cases are sufficiently similar to merit a detailed comparison.
In 1968, defendant Helen Willing retained plaintiffs Carl Mazzocone and Charles Quinn, who practiced law together, to represent her in a worker's compensation claim. The two lawyers successfully obtained a settlement for Willing, from which she collected disability benefits for several years. In addition to their fee, Mazzocone and Quinn deducted $150 from the settlement as costs of the case. They claimed, and their records verified, that the money had been paid to one Dr. Robert DeSilverio, a psychiatrist who had been retained to testify on Willing's behalf.
At some point, for an unknown reason (and contrary to all available evidence), Willing came to believe that Mazzocone and Quinn had diverted for their own benefit $25 of the $150 allegedly paid to Dr. DeSilverio. For two days in 1975, Willing marched in protest in an area adjacent to the court buildings at City Hall in Philadelphia where the Court of Common Pleas, before which Mazzocone and Quinn practiced, was located. While marching, Willing wore a "sandwich-board" sign around her neck and on which she had written: