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FRANKLIN PRESCRIPTIONS, INC. v. NEW YORK TIMES CO.

United States District Court, E.D. Pennsylvania


August 5, 2004.

FRANKLIN PRESCRIPTIONS, INC., Plaintiff,
v.
THE NEW YORK TIMES CO., Defendant.

The opinion of the court was delivered by: CYNTHIA RUFE, District Judge

MEMORANDUM OPINION AND ORDER

On January 10, 2001, Plaintiff Franklin Prescriptions, Inc. ("Franklin") initiated the instant defamation action against Defendant The New York Times Company (the "Times"), alleging that the Times had defamed Franklin in an article published on October 25, 2000. After more than three years of contentious litigation, including Motions to Dismiss and for Summary Judgment, the case went to trial before a jury in March 2004. On March 22, 2004, after a week-long trial, the jury found that the article in question was defamatory toward Franklin but that Franklin had not suffered any harm as a result of the defamation. Accordingly, judgment was entered in favor of the Times. Plaintiff filed a Motion for a Partial New Trial or in the Alternative for a Complete New Trial. For the reasons set forth below, Plaintiff's Motion is denied.

I. FACTUAL BACKGROUND

  In setting forth the following factual background, the Court draws all reasonable inferences in favor of Defendant, the verdict winner.*fn1 In existence since 1969, Franklin is a small, locally-owned pharmacy located in Philadelphia, Pennsylvania. With the advent of fertility treatments for women who have difficulty conceiving children, Franklin developed a specialty in the area of fertility medications. Franklin has an information-only website on the Internet that allows potential customers to view Franklin's offerings. However, customers cannot utilize this website to order or purchase prescription drugs online; nor can customers contact Franklin via electronic mail. Franklin accepts orders only via postmail, telephone or telefax, and only with a doctor's prescription.

  The Times is a national newspaper published in New York. On October 25, 2000, the Times published an article entitled, "A Web Bazaar Turns into a Pharmaceutical Free For All" (the "Article"). The Article discussed the risks and benefits of purchasing fertility drugs over the Internet. Although the text of the Article does not mention Franklin, the Article was accompanied by an edited version of Franklin's "web-grab."*fn2 The web-grab is juxtaposed with a side-bar labeled "Safety Tips for Buying E-Medicines," where the Article's author warns readers, inter alia, to "[a]void sites that fail or refuse to provide a United States address and phone number." The web-grab as seen in the Article did not include Franklin's address and telephone number.*fn3

  At trial, Franklin did not attempt to show that it suffered economic damages as a result of the Article. In fact, the Times presented evidence that Franklin's sales had actually increased in each of the months and years since the publication of the Article. Instead, Franklin sought to prove that its reputation had been harmed by showing 1) that the number of visitors to its website had dropped, 2) that it had suffered a decrease in customers outside of the Delaware Valley Region, and 3) that it had suffered a decrease in overnight shipping. Franklin did not present the testimony of any medical professionals or customers who had read the Article, and thus presented no direct evidence that any of them had a diminished view of Franklin's reputation as a result of the Article. In addition, the Times deposed each of the physicians whose patients Franklin contended stopped ordering medications from Franklin after publication of the Article; none of these physicians had read or heard about the Article.

  The jury found that although the Article contained false and defamatory implications about Franklin, Franklin did not suffer actual harm that was substantially caused by the Article.*fn4 Accordingly, the Court entered judgment in favor of the Times.

  II. ISSUES RAISED

  Plaintiff contends that a new trial or partial new trial is warranted because the Court erred by not instructing the jury on presumed damages and defamation per se. Because Plaintiff's argument for a new trial is based upon the Court's jury instructions, it is necessary to explain the procedure the Court used for developing those instructions.

  First, prior to trial, both parties filed proposed juryinstructions and jury interrogatories with the Court along with pretrial memoranda and motions in limine.*fn5 Then, after each party had presented its evidence to the jury, but before closing arguments, the Court held several conferences, both on and off the record, with counsel for both parties, during which the Court attempted to fashion a set of jury instructions and jury interrogatories that would be mutually acceptable to the parties. The first of these conferences took place off the record in chambers on March 18, 2004. Because the parties were unable to agree on appropriate jury instructions, upon suggestion of Plaintiff's counsel, the conference concluded with an agreement that the Court would draft a set of instructions that the parties could review and object to on the record. Any matters discussed and/or resolved by agreement of the parties or by ruling of the Court were routinely placed on the record at the Court's next session.

  The following morning, in the courtroom and on the record, the Court distributed a draft set of jury instructions to counsel.*fn6 The Court did not include instructions on presumed damages*fn7 or defamation per se in this draft, finding such instructions inapplicable under Pennsylvania law.*fn8 After giving the parties time to review the draft, the Court heard their objections out of the presence of the jury at a hearing that lasted approximately two hours. The Court spent the majority of the hearing addressing Defendant's objections to the instructions. Plaintiff opposed many of Defendant's proposed changes, arguing, inter alia, that Defendant wanted to make changes for its benefit to what were a "fair and reasonable and clean set of instructions."*fn9 For its part, Plaintiff initially made only two objections: 1) regarding a change in the instruction that Plaintiff must show that the newspaper article was published "of and concerning" Plaintiff; and 2) regarding the general instruction about compensatory damages.*fn10 In addition, near the conclusion of the hearing, Plaintiff made an additional objection regarding the lack of an instruction on defamation per se, which the Court overruled. Significantly, Plaintiff's counsel specifically sought to "preserve the record" on this objection.*fn11

  On March 22, 2004, before closing arguments, the Court distributed a new draft of its jury instructions that incorporated some of the parties' requested changes. When the Court asked the parties if there was anything left to address, Plaintiff's counsel responded in the negative. Counsel then delivered their closing arguments. Upon completion of closing arguments, the Court distributed copies of the verdict sheet to the jury and then instructed the jury. During these instructions, the Court did not mention presumed damages or defamation per se. Instead, the Court instructed the jury to award damages to compensate Plaintiff for actual harm suffered if the jury found that Plaintiff had established the essential elements of defamation:

Now, if plaintiff has established the essential elements of plaintiff's claim as explained in these instructions, plaintiff is entitled then to compensatory damages. You will then award plaintiff such amount as you find will fairly and adequately compensate plaintiff for losses suffered. Only damages that are the direct and natural result of the alleged libel may be recovered as compensatory damages. Plaintiff is entitled to be fairly and adequately compensated for all harm it suffered as a result of the false and defamatory communication published by the defendant. The injuries for which you may compensate the plaintiff by an award of damages against the defendant include the actual harm to the plaintiff's reputation that you find resulted from the defendant's conduct and any other special injuries that you find the plaintiff suffered as a result of the defendant's act.
If you find that plaintiff has established the essential elements of the defense [sic], but has failed to prove actual damages, you may award a nominal sum, such as one dollar, or any other nominal amount you choose.
The purpose of the law of damages is to award as far as possible just and fair compensation for the loss, if any occurred, which resulted from the defendant's violation of the plaintiff's rights. If you find that the defendant is liable for defamation, as I have explained it to you, then you must award the plaintiff sufficient damages to compensate it for any injury proximately caused by the defendant's conduct. These are known as compensatory damages. Compensatory damages seek to make the plaintiff whole, that is, to compensate plaintiff for the damage that plaintiff claims it has suffered.
And I remind you that [you] may award compensatory damages only for injuries, if any, that plaintiff proved were proximately caused by the defendant's allegedly wrongful conduct. The compensatory damages you award must be fair and reasonable, neither inadequate nor excessive. You should only award damages for those injuries that you find plaintiff has actually suffered or which plaintiff is reasonably likely to suffer in the future. In awarding compensatory damages, if you decide to do so, you should use common sense. Although it may be difficult, you should do your best to compute these damages and avoid simply guessing at an amount that would compensate plaintiff. However, you should keep in mind that the law does not require a plaintiff to prove its losses with mathematical precision, but only with as much definiteness and accuracy as the circumstances permit.
In sum, you should use your sound discretion in fixing an award of damages drawing reasonable inferences where you deem appropriate from the facts and circumstances in evidence.*fn12
  At approximately 1:00 p.m., the Court sent the jury to begin its deliberations. At approximately 4:50 p.m., the jury read its verdict to the Court, responding affirmatively to the first five questions on the verdict sheet, thereby finding that Plaintiff had proven all of the essential elements of defamation. On the sixth question, which asked, "Did Franklin Prescriptions, Inc. satisfy its burden of proving by a preponderance of the evidence that Franklin suffered actual harm that was substantially caused by the article?," the jury answered "No." Accordingly, the Court dismissed the jury and entered judgment in favor of Defendant. Plaintiff then timely filed the instant motion, contending that the Court erred by failing to instruct the jury on the law regarding presumed damages and defamation per se.

  III. STANDARD OF REVIEW

  "A new trial may be granted to all or any of the parties and on all or part of the issues . . . for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States."*fn13 A court should grant a new trial "to prevent a miscarriage of justice only when the jury's `verdict is contrary to the great weight of the evidence,' or when a `court commits an error of law which prejudices a substantial right of a party.'"*fn14 With regard to an erroneous jury instruction, "a new trial may be granted . . . if the `instruction was capable of confusing and thereby misleading the jury,' or if the jury instruction contained an error that was `so prejudicial that denial of a new trial would be inconsistent with substantial justice.'"*fn15 IV. DISCUSSION

  A. The Omission of an Instruction on Presumed Damages

  The Court instructed the jury to award damages to compensate Plaintiff for actual harm suffered if the jury found that Plaintiff had established the essential elements of defamation.*fn16 The jury found that Franklin did not suffer any actual harm or losses as a result of the Article. Plaintiff now contends for the first time that the Court erred by failing to instruct the jury on the law of presumed damages. Plaintiff's argument fails because: 1) Plaintiff did not properly object to the Court's instructions during trial; and 2) Plaintiff was not entitled to an instruction on presumed damages under Pennsylvania law.

  1. Waiver of Objections to Lack of Jury Instruction on Presumed Damages

  Defendant contends that Plaintiff waived its right to assign error to the lack of an instruction on presumed damages because Plaintiff did not properly object during the trial. Federal Rule of Civil Procedure 51(c) states that "[a] party who objects to an instruction or the failure to give an instruction must do so on the record, stating distinctly the matter objected to and the grounds for the objection." However, "Rule 51 . . . must be read with Rule 46, which provides that `it is sufficient that a party, at the time the ruling or order of the court is made or sought, makes known to the court the action which he desires the court to take or his objection to the action of the court and his grounds therefor. . . .'"*fn17 In any event, a party may not assign error to the Court's failure to give an instruction unless "that party made a proper request under Rule 51(a),*fn18 and — unless the court made a definitive ruling on the record rejecting the request — also made a proper objection under Rule 51(c)."*fn19 The purpose of Rule 51 "`is to afford the trial judge an opportunity to correct the error in his charge before the jury retires to consider its verdict' and to lessen the burden on appellate courts by diminishing the number of rulings at the trial which they may be called upon to review."*fn20

  Plaintiff responds that it preserved its objection on the presumed damages issue because it submitted a proposed written charge on presumed damages which, according to Plaintiff, was addressed and denied by the Court in its March 18, 2004 conference in chambers. Plaintiff's recollection of the March 18, 2004 conference is inaccurate. This conference began late in the afternoon after a full day of trial. The Court addressed several of Plaintiff's proposed instructions, including its proposed instruction on defamation per se, but as the conference stretched well into the evening with little agreement between the parties, the Court terminated the conference before addressing Plaintiff's presumed damages instruction. Regardless, even if the Court had addressed Plaintiff's proposed instruction at the March 18, 2004 conference, Plaintiff's objection was not preserved because that conference was off the record.

  The submission of a proposed instruction, without more, is insufficient to preserve an objection. Here, Plaintiff had three opportunities to object on the record to the lack of a presumed damages instruction. First, at the March 19, 2004 conference, the Court distributed a draft of its instructions and asked the parties to review it before entertaining objections. Plaintiff's counsel reviewed the draft and made three specific objections, including an objection to the absence of a defamation per se instruction specifically to "preserve the record" on that objection. However, Plaintiff never mentioned the absence of a presumed damages instruction. On the other hand, Defendant made a plethora of objections and was primarily responsible for this conference's two-plus hour duration. At one point, Defendant's persistent objections caused Plaintiff's counsel to remark out of frustration that Defendant wanted to make changes for its benefit to what were a "fair and reasonable and clean set of instructions." The Court gave Plaintiff a second opportunity to object on March 22, 2004 before counsel delivered closing arguments, and Plaintiff raised no objections. Finally, the Court gave Plaintiff yet another opportunity to object after the instructions were read to the jury, and again Plaintiff chose not to object.*fn21

  By failing to object at any point on (or off) the record to the absence of a presumed damages instruction, Plaintiff has waived this issue. The case relied upon by Plaintiff, Smith v. Borough of Wilkinsburg, 147 F.3d 272 (3d Cir. 1998), is factually distinct. In Smith, the plaintiff submitted a proposed instruction and objected to the omission of the proposed instruction on the record at an in camera charge conference.*fn22 Because the district court explicitly denied the plaintiff's request, the Third Circuit held that "the district court was fully apprised of Smith's position, and it would serve no purpose to require counsel to have formally reasserted the objection after the charge had been given to the jury."*fn23 Here, unlike in Smith, Plaintiff never objected, either on the record or in chambers, to the absence of a presumed damages instruction. Further, Plaintiff's claim that it did not raise such an objection on the record because "the Court made it abundantly clear that it did not wish to rehash issues that had already been raised"*fn24 is inconsistent with the fact that Plaintiff specifically sought to preserve on the record its objection relating to defamation per se, an instruction that had been discussed and rejected by the Court at the March 18, 2004 conference in chambers.

  Plaintiff's argument is further weakened by the fact that it never raised an objection to the absence of a jury interrogatory related to presumed damages in the verdict sheet submitted to the jury.*fn25 Although, Plaintiff does not argue that the absence of such an interrogatory is a ground for a new trial, the jury instructions and verdict sheet are clearly interrelated, and Rule 51 applies to verdict sheets as well as jury instructions.*fn26 Even if the Court had instructed the jury on presumed damages, the verdict sheet, which specifically asked the jury only to award damages for actual harm, would have rendered such an instruction meaningless. Accordingly, by failing to raise an objection related to presumed damages at any point during the trial, Plaintiff waived any objection to the absence of a presumed damages instruction.

  2. Plain Error

  Despite Plaintiff's failure to object to the absence of a presumed damages instruction, a new trial may be warranted if the lack of such instruction was plain error.*fn27 The Court's "discretion to conduct a review under the plain error doctrine is limited to cases where the error is (1) fundamental and highly prejudicial or if the instructions are such that the jury is without adequate guidance on a fundamental question and (2) our failure to consider the error would result in a miscarriage of justice."*fn28 As such, review for plain error is "a form of discretionary review" that should be "exercised sparingly."*fn29

  Because the Supreme Court of Pennsylvania has not specifically addressed whether presumed damages are available under Pennsylvania law, we must predict how the Supreme Court of Pennsylvania would rule.*fn30 Plaintiff argues that Pennsylvania Suggested Standard Civil Jury Instructions ("PSSCJI") section 13.10B should be given in every case, as is stated in the Subcommittee Note accompanying that instruction. Section 13.10B provides as follows: If you find that the defendant acted either intentionally or recklessly in publishing the false and defamatorycommunication, you may presume that the plaintiff suffered both injury to [his] [her] reputation and the emotional distress, mental anguish, and humiliation that would result from such a communication. This means you need not have proof that the plaintiff suffered emotional distress, mental anguish, and humiliation in order to award [him] [her] damages for such harm because such harm is presumed by the law when a defendant publishes a false and defamatory communication with the knowledge that it is false or in reckless disregard of whether it is true or false.

 

In determining the amount of an award for such presumed injury to the plaintiff's reputation and suffering of emotional distress, mental anguish, and humiliation by the plaintiff, you may consider the character and previous general standing and reputation of the plaintiff in [his] [her] community. You may also consider the character of the defamatory communication that the defendant published, its area of dissemination, and the extent and duration of the publication. [If the defendant made a public retraction or apology to the person or persons to whom the publication was made, that fact, together with the timeliness and adequacy of the retraction or apology, is important in determining the probable harm to the plaintiff's reputation.] [You may also take into account the defendant's unsuccessful assertion of the substantial truth of the defamatory communications as a matter likely to affect the plaintiff's reputation.] [You may also consider what probable effect the defendant's conduct had on the plaintiff's trade, business, or profession, and the harm that may have been sustained by the plaintiff as a result of that conduct.]
  However, the Subcommittee Note appears to be at odds with the Pennsylvania Superior Court's decision in Walker v. Grand Central Sanitation, Inc., 634 A.2d 237, 244 ( Pa. Super. 1993), holding that "a defendant who publishes a statement which can be considered slander per se is liable for the proven, actual harm the publication causes."*fn31 In so ruling, the Walker court cogently observed:

  Requiring the plaintiff to prove general damages in cases of slander per se accommodates the plaintiff's interest in recovering for damage to reputation without specifically identifying a pecuniary loss as well as the court's interest in maintaining some type of control over the amount a jury should be entitled to compensate an injured person. On one hand, a slander per se plaintiff is relieved of the burden to actually prove pecuniary loss as the result of the defamation; yet on the other hand, a jury will have some basis upon which to compensate her. Allowing the plaintiff to submit a claim for redress upon the presumption that she was damaged, especially in a case such as this, where the record is patently clear that no harm was suffered, requires the court to blindly follow a rule of law without regard to the reality of the situation presented. We cannot sanction, nor can we find that our Supreme Court has ever intended to sanction, such a rule.*fn32

  Although the Supreme Court of Pennsylvania denied allocatur in Walker,*fn33 numerous cases have cited Walker as authority for the position that defamation plaintiffs must prove actual harm.*fn34

  Plaintiff relies on Frisk v. News Co., 523 A.2d 347 ( Pa. Super. 1986), where the court, with little discussion, approved of an instruction that, according to the court,*fn35 mirrored PSSCJI § 13.10(B). This holding is directly at odds with Walker, which does not even cite to Frisk. Unlike Frisk, the Walker court spent a substantial portion of its opinion discussing the rationale behind presumed damages before concluding that the Supreme Court of Pennsylvania would likely adopt Section 621 of the Restatement (Second) of Torts and require proof of actual harm. Moreover, numerous courts have relied upon Walker's holding on presumed damages, whereas Frisk has been cited only three times for the proposition that presumed damages are available under Pennsylvania law, and presumed damages was not a major issue in any of those cases.*fn36

  Based upon its thorough review of the case law, the Court finds that the Walker court correctly predicted that the Supreme Court of Pennsylvania would adopt the Restatement's position that defamation plaintiffs must prove actual harm.*fn37 In addition, the Court finds PSSCJI § 13.10(B) particularly inapplicable in this case because Plaintiff is a corporation and thus cannot suffer emotional distress, mental anguish or humiliation.*fn38 Furthermore, even if presumed damages were available under Pennsylvania law, they would not be available to Plaintiff here because the evidence presented at trial fell well short of that necessary for a showing of actual malice or reckless disregard for the falsity as is constitutionally required for the recovery of presumed damages.*fn39 Therefore, presumed damages were not available to Plaintiff in this case. Accordingly, because Plaintiff was not entitled to such a jury instruction, the lack of such an instruction cannot be plain error.

  B. The Omission of an Instruction on Defamation Per Se

  Plaintiff contends that the Court erred by not instructing the jury on the issue of defamation per se. "Under Pennsylvania law, communications containing `words imputing (1) criminal offense, (2) loathsome disease, (3) business misconduct, or (4) serious sexual misconduct,' are considered defamatory per se."*fn40 When a statement is defamatory per se, a plaintiff can recover general damages (i.e., harm to reputation) and need not prove special damages (i.e., pecuniary loss).*fn41 "Whether the allegedly defamatory statements are defamatory per se is a question for the court."*fn42

  Plaintiff argues that the Court misled the jury by failing to specify that Franklin was not required to prove financial damages. This argument lacks merit. First, the premise of Plaintiff's argument — that the Court did not instruct the jury that it could compensate Plaintiff for reputation harm — is inaccurate. As Defendant argues, "the Court gave the gist of [P]laintiff's proposed instruction to the jurors."*fn43 Plaintiff proposed the following instruction on defamation per se:

Because of the particular negative and derogatory character of some defamatory communications, the law categorizes them as defamatory per se, and in such situations, the plaintiff does not have to show that the defamation caused it economic or financial harm. Thus, in cases involving defamation per se, the plaintiff does not need to show actual economic losses, but only needs to prove actual harm to its reputation, and even then, such reputation damages may be presumed if the plaintiff proves the defendant acted intentionally or recklessly. I will explain the concept of presumed damages later.
Where the defamatory communication imputes to the plaintiff conduct, characteristics, or a condition that would adversely affect it in its lawful business or trade, the law deems the communication defamatory per se. It is also defamatory per se to allege one is guilty of criminal conduct.
If you find the defamatory communication in this case falls into any one of these categories, plaintiff does not have a burden to prove economic losses as a result of the defamatory communication.*fn44
  By comparison, the Court's actual instruction included the following charges: 1) "actual injury can include impairment of reputation"; 2) "Plaintiff is entitled to be fairly and adequately compensated for all harm it suffered as a result of the false and defamatory communication published by the defendant"; and 3) "the injuries for which you may compensate the plaintiff by an award of damages against the defendant include the actual harm to the plaintiff's reputation that you find resulted from the defendant's conduct and any other injuries that you find the plaintiff suffered as a result of defendant's act."*fn45 If anything, the Court's instruction was more beneficial to Plaintiff than Plaintiff's proposed instruction because it instructs the jury to award damages for reputational harm without first requiring that the jury find defamation per se. In essence, the only difference between the Court's instruction and Plaintiff's proposed instruction is that the Court instructed the jury as to what it could compensate Plaintiff for, including reputational harm, whereas Plaintiff's instruction specified what the jury did not have to find, specifically, economic harm. That a jury instruction is worded differently from a party's proposed instruction does not entitle Plaintiff to a new trial.

  In addition, Plaintiff simply did not present any evidence that would allow a jury to conclude that it was harmed.*fn46 Plaintiff did not present the testimony of one doctor or potential customer who had even read the article, let alone read it and formed a negative opinion of Franklin as a result. Moreover, in the months and years following the publication of the article, Plaintiff's sales increased at a rate comparable to the sales increases prior to the publication of the article. This Court fails to see how any reasonable jury could find that an article that was not read by any potential customers caused any harm, reputational or otherwise, to a company whose revenues increased in the months and years following the publication of the article. Thus, the reason the jury did not find any reputational harm was not because it was misled by the Court's damage instruction, but because Plaintiff did not present any evidence of reputational harm. Accordingly, even if Plaintiff was entitled to its proposed instruction on defamation per se, the lack of such an instruction did not harm Plaintiff.

  IV. CONCLUSION

  For the foregoing reasons, the Court's jury instructions were proper, and Plaintiff is not entitled to a new trial or partial new trial.

  An appropriate Order follows. ORDER

  AND NOW, this 5th day of August, 2004, upon consideration of Plaintiff Franklin Prescription, Inc.'s Motion for A Partial New Trial, or in the Alternative, for a Complete New Trial [Doc. #100], Defendant The New York Times Company's Memorandum in Opposition thereto [Doc. #104], Plaintiff's Motion for Leave to File a Reply Memorandum and the Reply Memorandum attached thereto [Doc. #114], and Defendant's Memorandum in Response [Doc. #115], it is hereby ORDERED as follows:

  1. Plaintiff's Motion for Leave to File a Reply Memorandum [Doc. #114] is GRANTED;

  2. Plaintiff's Motion for a Partial New Trial, or in the Alternative, for a Complete New Trial [Doc. #100] is DENIED; and

  3. This case shall remain CLOSED for statistical purposes.

  It is so ORDERED.


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