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

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 ...


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