The verdict shocked media lawyers, who denounced the outsize award as dangerous to the press’s First Amendment rights. ““This is not consistent with the notion of a strong media,’’ says Sandra Baron, executive director of the Libel Defense Resource Center. The Journal said it would ask a judge to set aside the award, and many lawyers think it has a good shot. A majority of libel judgments are reversed on appeal, or the awards reduced.
Written by reporter Laura Jereski, the story depicted MMAR, which sold mortgage-backed securities, as a freewheeling operation that overpriced its product and deceived its top customer, the Louisiana pension fund. The story also said MMAR’s two owners, Cory Miner and Paul Brown, spent $8,000 entertaining Japanese brokers in a topless bar.
The firm’s lawyers argued that the Journal story was substantially incorrect and that it scared away clients, causing MMAR to close a month later. The jury agreed: it found that five of eight statements it was asked to consider in the story were knowingly false and defamatory. Among them: that MMAR ran up $2 million in limousine bills in one year, and that it hid its losses. The jury awarded $22.7 million in actual and $200 million in punitive damages. Jereski was ordered to pay $20,000.
If anyone still needed convincing, the verdict shows again that juries have little sympathy for the media. Few suits against the media reach the trial stage. But a series of high-profile verdicts, including last year’s $5.5 million award against ABC News in the Food Lion case, has media lawyers jumpy.
The lawyers for MMAR insisted this wasn’t a press-bashing case–it was a Journal-bashing case. Mark Harwell, MMAR’s lawyer, says jurors were ““outraged at the indifference and arrogance’’ of a powerful paper. The only journalism the verdict will chill, he says, ““is bad investigative reporting.’’ Says Journal managing editor Paul Steiger, ““We were chronicling the difficulties of this company; we did not cause them.’’ A judge will now decide that, and not only the media will be watching closely. The Journal’s insurance carrier is sitting on a $45 million libel policy.
