author: ROBERT L. CARTER, District Judge.

text:
    MODERN SETTINGS, INC., and Binder & Binder, as attorneys for Modern Settings, Inc., Plaintiffs, v. PRUDENTIAL-BACHE SECURITIES, INC., Prudential-Bache Metal Co., Inc., Gary Adornato, Felix McCarthy, Richard Berlin and Frederic Wasserspring, Defendants.
    No. 83 Civ. 6291 (RLC).
    United States District Court, S.D. New York.
    Feb. 27, 1985.

      Jaffe & Asher, New York City, for plaintiffs; Peter A. Jaffe, New York City, of counsel.
    Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for PrudentialBache defendants; Leonard Joseph, Scott M. Univer, Steven J. Miller, New York City, of counsel.
    Henry Putzel, III, New York City, for defendant Gary Adornato.
   OPINION

ROBERT L. CARTER, District Judge.

In an opinion and order dated October 17, 1984, 602 F.Supp. 511 (“Modern Settings I”), the court dismissed plaintiffs’ amended complaint for failing to state with the requisite particularity under Rule 9(b), F.R.Civ.P., various counts of fraud with which they charged defendants. The court granted plaintiffs leave to replead; they have repleaded, and defendants have moved to dismiss the second amended complaint on the same grounds as the first.

The facts of this case are set out in the October 17 opinion, with which familiarity is assumed. In brief, the plaintiffs charge that defendants fraudulently misvalued the assets held by plaintiffs in an account maintained by defendants, fraudulently liquidated plaintiffs’ account, and slandered the plaintiffs. The first two counts of the second amended complaint, now before the court, allege that the defendants violated § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and § 4(b) of the Commodity Exchange Act, 7 U.S.C. § 6(b), and committed common-law fraud. The third count alleges defamation, and the fourth count alleges violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962.

Plaintiffs’ first claim for relief

Plaintiffs’ first count alleges that the defendants fraudulently misvalued plaintiffs’ interest in pools of mortgage instruments issued by the Government National Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA) and maintained at PrudentialBache Securities. The court dismissed a similar claim in the first amended complaint for failure to “develop facts from which it [could] be inferred that the error was either known or so obvious that defendants must have been aware of it.” Modern Settings I, supra, 602 F.Supp. at 514. See also Crystal v. Foy, 562 F.Supp. 422, 424-25 (S.D.N.Y.1983) (Weinfeld, J.) (a plaintiff alleging fraud must set forth a factual predicate for the allegations, including specific facts, the sources from which the facts were derived, and a basis from which an inference of fraud may fairly be drawn).

Plaintiffs claim that this defect is cured in the second amended complaint. Plaintiffs no longer contend, as they did in the first amended complaint, that the misvaluation itself was fraudulent. Rather, they allege that the misvaluation is evidence from which it may be inferred that defendants failed to employ a “reliable system of checks and balances to prevent or timely warn of such errors” (Complaint 1129). The need for such a system, plaintiffs assert, was well known to defendants because errors had occurred in valuating GNMA or FNMA securities in three other accounts in April and July, 1983 (Complaint 1130). The failure to employ a reliable checking system under these circumstances, plaintiffs conclude, constituted “a reckless disregard of the consequences of [the] failure [to employ such a system] tantamount to fraud” (Complaint ¶ 33).

It is true that reckless conduct satisfies the scienter requirement of § 10(b) and Rule 10b-5. However, the complaint must make clear that more than mere negligence is alleged. Modern Settings I, supra, 602 F.Supp. at 514, and cases cited there. “[I]f recklessness means something more culpable than negligence, as it must, then an allegation that a defendant merely ‘ought to have known’ is not sufficient to allege recklessness.” Troyer v. Karcagi, 476 F.Supp. 1142, 1152 (S.D.N.Y.1979) (Sweet, J.). Reckless conduct “is, at the very least, conduct which is ‘highly unreasonable’ and which represents ‘an extreme departure from the standards of ordinary care ... to the extent that the danger was known to the defendant or so obvious that the defendant must have been aware of it.’ ” Rolf v. Blyth, Eastman Dillon and Co., Inc., 570 F.2d 38, 47 (2d Cir.), cert. denied, 439 U.S. 1039, 99 S.Ct. 642, 58 L.Ed.2d 698 (1978), appeal after remand, 637 F.2d 77 (2d Cir.1980) (citations omitted).

In this case, plaintiffs have not pleaded facts from which it may be inferred that the danger of misvaluation was either known or so obvious that defendants must have been aware of it. Plaintiffs’ allegations that some kind of error occurred in three other GNMA or FNMA accounts are not, by themselves, sufficient to support the inference that defendants must have known that the specific kind of error that occurred in the Modern Settings account was possible. Indeed, the account executive responsible for plaintiffs’ account testified that the earlier misvaluations did not involve the kind of error — misapplication of the “amortized value factor” — that was involved in the Modern Settings misvaluation, and that, as far as he knew, the error made in Modern Settings’ account was unprecedented, (Deposition of Gary Adornato, at 103-104). Plaintiffs’ allegations may (though the court does not decide) permit an inference of negligence, but they certainly do not rise to the level of permitting an inference of recklessness.

Plaintiffs make a second claim under the first count for fraud — “reckless reassurance.” They allege that the defendants repeatedly assured them that the valuations were correct and that precautions to insure accuracy were being taken. For instance, plaintiffs say they were told that at least five separate persons or offices within the corporate defendants were reviewing each transaction and checking for errors (Complaint ¶ 36). Plaintiffs allege these assurances were given after defendants were put on notice to be especially careful in evaluating the Modern Settings account — both by plaintiffs, who informed defendants that plaintiffs did not understand the valuation process and would rely on defendants’ figures, and by the appearance of other unrelated errors in plaintiffs’ account (Complaint ¶¶ 35-37). Plaintiffs argue that the assurances were fraudulent in that they were recklessly made (Complaint ¶ 43).

A statement is recklessly made if it is made “without investigation and with utter disregard for whether there was a basis for the assertions.” Rolf v. Blyth, Eastman Dillon and Co., Inc., supra, 570 F.2d at 47-48. In this case, plaintiffs do not allege that the defendants gave the assurances without investigating to determine whether the safeguards were really being used. What is more, plaintiffs do not even allege that the promised precautions were not actually (if unsuccessfully) employed. Thus, there is no allegation that five different persons or offices did not in fact check the transactions, or that the defendants gave the assurance “with utter disregard” for whether five different persons or offices were really checking. Plaintiffs argue that the fact that the error occurred proves that the promised precautions could not have been in use. But the mere occurrence of the error is not sufficient to justify the inference that the promised system was not being employed. See Aldrich v. New York Stock Exchange, Inc., 446 F.Supp. 348, 356 (S.D.N.Y.1977) (Werker, J.). The claim of “reckless reassurance,” therefore, is not supported by sufficient specific factual allegations.

Plaintiffs make a third claim under the first count for fraud. They allege that Gary Adornato, the Prudential-Bache Securities account executive handling plaintiffs’ account, fraudulently traded in Coleco stocks using plaintiffs’ assets, against plaintiffs’ express instructions. A similar claim in the first amended complaint was dismissed because the pleadings did not permit the court to infer the willful destruction of plaintiffs’ account. Now plaintiffs argue that they never meant to imply that defendants were destroying plaintiffs’ account willfully. Rather, they argue that the unauthorized trading itself constituted fraud. Plaintiffs also add two new important factual allegations. First, they claim that when the plaintiffs gave Adornato instructions to stop speculating in Coleco stocks, plaintiffs told Adornato that if he did not comply they would inform Adornato’s superior! According to plaintiffs, Adornato told the plaintiffs he would comply, but actually did not, causing losses in plaintiffs’ account (Complaint ¶¶ 47-48). Second, plaintiffs claim that Adornato did not comply in order to earn the higher commissions that went along with the sort of investment — specifically, the exercise of a put option — he was engaging in (Complaint ¶ 49).

Here plaintiffs have alleged facts that permit the court to infer fraud in general and scienter in particular. According to plaintiffs, Adornato stated that his current intention was to liquidate the put position, but he did not liquidate. From this, the court may legitimately infer that Adornato’s statement of current intention was false, that Adornato knew it was false, and that he made the false statement with the motive of earning a higher commission. Plaintiffs relied on the misrepresentation by not informing Adornato’s superior, and were damaged. The court, therefore, cannot dismiss plaintiffs’ claim of fraudulent trading in Coleco stock.

Plaintiffs’ second claim for relief

Plaintiffs allege that on August 22,1983, Prudential-Bache Securities liquidated all or a substantial portion of plaintiffs’ account, at a $250,000 loss to plaintiffs, purportedly because plaintiffs failed to meet margin calls (Complaint ¶¶ 56-57). Plaintiffs argue that the liquidation was fraudulent in that it was carried out hastily and maliciously, and was part of an attempt by defendants to manipulate the market in GNMA and FNMA pools and other securities (Complaint ¶¶ 66-71). In dismissing the first amended complaint, the court found that the charges of malicious liquidation were “vague and conclusory,” Modern Settings I, supra, 602 F.Supp. at 515, and that the charges of market manipulation were “speculative on the issue of what defendants gained as a consequence of the fraud alleged[.]” Id. at 514.

Plaintiffs have corrected those defects in their second amended complaint. Specifically, plaintiffs allege that shortly before defendants liquidated plaintiffs’ account, they liquidated large positions of one or more other customers in GNMA and FNMA pools (Complaint ¶ 67). These liquidations, plaintiffs assert, were carried out abruptly, in an unreasonable and disorderly fashion (Complaint ¶ 68). By dumping on the market large amounts of GNMA and FNMA pools, plaintiffs claim, defendants artificially depressed the market price. When plaintiffs’ position in the pools was abruptly liquidated, too, plaintiffs charge, prices were driven down even further (Complaint ¶ 68). Plaintiffs allege that Prudential-Bache Securities profited from this malicious liquidation, and market manipulation by purchasing for itself the undervalued securities and reselling them at a profit, and by reselling the securities at the depressed price to preferred customers who then resold at higher prices — thus creating both goodwill and commissions for Prudential-Bache Securities.

Defendants argue that plaintiffs’ allegations are unsupported by the requisite specific facts. Rule 9(b), however does not require a plaintiff to “recite the evidence or plead detailed evidentiary matter[.] “Modem Settings I, supra, 602 F.Supp. at 513. It merely requires sufficient factual particularity to enable defendants to prepare an adequate defense, Posner v. Coopers & Lybrand, 92 F.R.D. 765, 768 (S.D.N.Y. 1981) (Goettel, J.), affd, 697 F.2d 296 (2d Cir.1982), and to safeguard defendants’ reputations and goodwill since charges of fraud, even without more, can be highly damaging. Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 115 (2d Cir.1982). Plaintiffs have carried this burden. Moreover, Rule 9(b) “is not a vehicle by which potentially meritorious claims are to be driven out of court because the plaintiff has failed to allege facts that he can only obtain through taking discovery that he has thus far been denied. Here, the facts of which plaintiffs are aware reasonably support their claim that defendants acted with scienter; having alleged those facts, they cannot in justice be asked to go further at this juncture of the litigation, and the court declines to interpret Rule 905) as demanding that they do.” Gibbons v. Udaras na Gaeltachta, 549 F.Supp. 1094, 1124 (S.D.N.Y.1982) (Ward, J.) (citations omitted).

Defendants also argue that the alleged abrupt liquidations of a few accounts could not possibly have affected the price of GNMA and FNMA pools, in view of the multi-billion dollar size of the government-backed mortgage securities market. Plaintiffs counter that their particular GNMA and FNMA pools were not heavily traded, and that the market price was determined by the price of the immediately preceding trade. Thus, they conclude, defendants did have the ability unilaterally to depress the market price of the pools. Whether defendants actually had this ability, and if so whether they exercised it, are questions of fact. At this stage of the litigation the court cannot resolve questions of fact; it can only determine whether the defendants have pleaded requisite facts with sufficient particularity to sustain a claim for fraud. The court finds that the plaintiffs have done so.

Plaintiffs also allege other facts to support their charges of malicious liquidation and market manipulation. Specifically, plaintiffs allege (1) that the liquidation was improper because any undermargining was not plaintiffs’ fault but rather the result of defendants’ reckless misvaluation and unauthorized Coleco trading (Complaint ¶ 56); (2) that the liquidation was malicious because it resulted from an intra-corporate dispute within the corporate defendants (Complaint ¶ 66); (3) that the liquidation was intentionally carried out hastily by Felix McCarthy, the Melville, Long Island branch manager, so that all commissions would be credited to him after Adornato had been removed from the Modern Settings account but before a new account executive could be appointed (Complaint ¶ 70); and (4) that defendants liquidated plaintiffs’ interests in other securities— shares in Monchik Weber Corp. and in Quality Systems, Inc. — to depress their prices, too. In light of the court’s decision that sufficient specific facts have been alleged to justify the inference of market manipulation and malicious liquidation with respect to the alleged abrupt liquidation of GNMA and FNMA pools, it is not necessary to determine the sufficiency of these other factual allegations.

Plaintiffs’ third claim for relief

Plaintiffs’ third count, for defamation, states a claim for which relief can be granted. As noted in the court’s October 17 opinion, the federal rules do not require special pleading of facts for charges of libel and slander. Modem Settings I, supra, 602 F.Supp. at 515, citing Geisler v. Petrocelli, 616 F.2d 636, 640 (2d Cir.1980). The claim, therefore, is not dismissed.

Plaintiffs’ fourth claim for relief

Plaintiffs’ RICO claim is foreclosed by the recent decisions in this circuit, Sedima, S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482 (2d Cir.1984) and Bankers Trust Co. v. Rhoades, 741 F.2d 511 (2d Cir.1984). These decisions require that in order to state a cause of action under RICO, “there must be a ‘violation,’ that is, criminal convictions on the underlying predicate offenses [or] a conviction under RICO itself.” Sedima, S.P.R.L. v. Imrex Co., supra 741 F.2d at 503. Plaintiffs have alleged no such convictions. Moreover, these decisions also require that to have standing under RICO, a plaintiff must allege a “ ‘racketeering injury’ [, that is,] injury different in kind from that occurring as a result of the predicate acts, or not simply caused by the predicate acts, but also caused by an activity which RICO was designed to deter.” Id. at 496. Plaintiffs have not alleged any “racketeering injury”; the only injury alleged flows directly from the predicate acts. Accordingly, the fourth claim is dismissed.

Conclusion

Defendants’ motion to dismiss with prejudice is: (1) granted with respect to plaintiffs’ first cause of action insofar as that cause of action is predicated on misvaluation of plaintiffs’ account and on “reckless reassurance”; (2) denied with respect to plaintiffs’ first cause of action insofar as that cause of action is predicated on defendants’ trading in Coleco shares; (3) denied with respect to plaintiffs’ second cause of action; (4) denied with respect to plaintiffs’ third cause of action; and (5) granted with respect to plaintiffs’ fourth cause of action.

IT IS SO ORDERED.

      . Defendants cite a newspaper report that new sales of GNMA unit trusts amounted to $3.2 billion in 1982 and $4.3 billion in 1983. New York Times, Dec. 7, 1984, at D1, col. 3.


source: Caselaw Access Project

author: TAURO, District Judge.

license: Public Domain

text:
    UNITED STATES of America v. Frank J. LEPERE.
    No. CR No. 83-308-T.
    United States District Court, D. Massachusetts.
    Feb. 27, 1985.

      Janis M. Berry, Asst. U.S. Atty., Chief, Criminal Narcotics Task Force, Boston, Mass., for the United States.
    Martin G. Weinberg, Oteri, Weinberg & Lawson, Boston, Mass., for defendant.
   SUPPLEMENTAL MEMORANDUM AND ORDER

TAURO, District Judge.

On February 26, 1985, the Court of Appeals issued the following order:

Because of this court’s uncertainty as to whether the district court interpreted the relevant statutory presumption as this court interpreted it in the subsequently decided case of United States of America v. Mark Jessup, — F.2d —, No. 84-1983 (1st Cir. February 25, 1985), we vacate the district court’s order and remand this case for reconsideration in light of Jessup.

In response, this court advises that it did interpret the relevant statutory presumption in accordance with the subsequently decided case of United States of America v. Mark Jessup. In order to resolve any ambiguity on that score, this court amends the last paragraphs of its memorandum and order of December 19, 1984 as follows:

The court is persuaded that Congress intended to impose on persons charged with major drug offenses the burden of producing evidence that would rebut the statutory presumption that they pose a significant risk of flight or danger to the community. Absent the statutory presumption, defendant’s proposed conditions of release might satisfy the court that he presents a reasonable bail risk. The defendant’s proposal, however, is not sufficient to counterbalance the additional factor presented by the statutory presumption established in the Bail Reform Act. In other words, because of that presumption, the government has met its burden of persuasion.

For the reasons stated herein, defendant’s motion to revoke the Magistrate’s detention order is hereby denied.

      . 599 F.Supp. 1322 (D.Mass.1984).

      . This paragraph previously read:
      The court is persuaded that Congress intended by its statutory presumption to raise the threshold that persons charged with major drug offenses must meet in order to establish that they do not pose a significant risk of flight or danger to the community. Thus, while the defendant’s proposed conditions and proffered property might otherwise satisfy the court that he poses a reasonable risk of flight, the defendant’s proposal does not satisfy the new statutory burden regarding flight. Nor does it rebut the presumption of dangerousness. [footnote omitted]


author: LUONGO, Chief Judge.

text:
    James COUGHLIN and Patricia Coughlin v. WESTINGHOUSE BROADCASTING AND CABLE, INC.
    Civ. A. No. 83-0944.
    United States District Court, E.D. Pennsylvania.
    Feb. 28, 1985.

      Sarah M. Thompson, Philadelphia, Pa., for plaintiffs.
    Jerome J. Shestack, Alan M. Lieberman, Janet S. Kole, Philadelphia, Pa., for defendant.
   OPINION

LUONGO, Chief Judge.

Plaintiffs James and Patricia Coughlin, a Philadelphia police officer and his wife, brought this defamation action because of a televised broadcast entitled “After Hours on American Street.” The broadcast dealt with alleged official corruption in connection with a Philadelphia after hours club. KYW-TV (channel 3), a Philadelphia television station owned and operated by defendant Westinghouse Broadcasting & Cable, Inc., aired portions of the program on February 17, 18 and 19, 1982.

In 1981, KYW’s investigative news team (the I-Team) received complaints concerning the Ukrainian-American Club on American Street in Philadelphia. According to local residents, the club’s patrons were noisy and disruptive and the club consistently served liquor after 3:00 a.m., in violation of the Philadelphia Liquor Code. The residents charged that the Philadelphia police and the Liquor Control Board had ignored their complaints. Based on these reports, the I-Team began to investigate the club. The results of their investigation were broadcast in “After Hours on American Street.” The program portrayed the activities which led to neighbors’ complaints and reported that the investigation raised serious questions concerning whether members of the police department and the Liquor Control Board were doing their jobs. KYW reporter Stan Bohrman described a 1974 Pennsylvania Crime Commission report, which had concluded that Philadelphia’s practice of using police officers to enforce the liquor laws with respect to private clubs fostered corruption. The I-Team, according to the program, had observed police activities on American Street similar to those described by the Crime Commission. The program illustrated this point with films taken outside the club on October 11, 1982, describing the filmed activity as “the most suspicious activity we saw on American Street.” The films, accompanied by commentary, first showed police car 39 arriving at the club. An officer entered the club at 3:52 a.m. and left five minutes later. A number of people remained in the club. At 3:57 Officer Coughlin, who was driving car 35, reported over police radio that he was returning to headquarters for paperwork. The officer in car 39 returned to the club at 4:04 and left at 4:11 without recording the stop in his patrol log. Coughlin then drove car 35 to the club, backed up slowly, and drove away. Several minutes later car 35 returned. Coughlin entered the club and came out almost immediately, carrying an object in his hand. At this point, KYW stopped the film and showed Coughlin with a circle drawn around the object in his hand. The accompanying narrative stated: “As far as police radio knows, car 35 is still out at headquarters doing paperwork. Well, the only paperwork we saw him doing was carrying this envelope out of the club less than a minute after he went in. That officer is Patrolman James Coughlin.” Elsewhere in the broadcast the narrative stated that an officer who stops without reporting his location over police radio “generally does not want it known that he’s there.”

KYW then showed film clippings of Coughlin refusing to be interviewed by I-Team reporters about the events described above and another incident on October 11. According to Mr. Bohrman, car 35 had arrived at the Ukrainian-American Club at 12:50 a.m. on October 11 in response to a vandalism complaint. The I-Team noted that when the officer returned from investigating the complaint he tried four times to find the right key to start the car. Because the officer was apparently unfamiliar with car 35, the I-Team conjectured that he was not Officer Coughlin. Coughlin’s name was on the official report of the incident, however, and the patrol log recorded him as being in car 35 from 12:00 to 8:00 a.m., October 11. In conclusion, the program reported several other facts for which the I-Team could find no apparent explanation. Coughlin had entered the club at 4:17 a.m; without his standard patrol equipment consisting of nightclub, uniform jacket and hat. Car 35’s official patrol log contained an unexplained gap for the period between 4:00 and 4:20 a.m., during which the I-Team had observed Coughlin on American Street. At 3:57, however, Coughlin had reported that he was returning to headquarters for paperwork.

Plaintiff James Coughlin alleges that this program defamed him by implying that he had engaged in corrupt activities and accepted a bribe from the Ukrainian-American Club. He claims the program placed him in a false light, invaded his privacy, and caused him severe emotional distress. Plaintiff Patricia Coughlin seeks damages for loss of her husband’s society, companionship and consortium. Plaintiffs seek punitive as well as compensatory damages, alleging that defendant’s conduct in airing the broadcast was outrageous.

Currently before me are plaintiffs’ motion to compel defendant to answer certain interrogatories and deposition questions and defendant’s motion for summary judgment. I will deal with the discovery motion first, and then turn to the summary judgment motion.

I.

Plaintiffs have moved for discovery with respect to the following: (1) portions of defendant’s videotapes not included in the broadcast (“outtakes”); (2) facts supporting statements made in the broadcast and sources of those facts; (3) efforts made by defendant to verify its information; (4) defendant’s editorial processes as to each statement; and (5) defendant’s allegedly confidential sources. Defendant opposes plaintiffs’ motion on the ground that the information sought is privileged under the Pennsylvania Shield Law, 42 Pa. C.S.A. § 5942(a). Because I conclude that Pennsylvania law protects this information from discovery, I will deny plaintiff’s motion to compel.

Pennsylvania’s shield law provides:

No person engaged on, connected with, or employed by any newspaper of general circulation or any press association or any radio or television station, or any magazine of general circulation, for the purpose of gathering, procuring, compiling, editing or publishing news, shall be required to disclose the source of any information procured or obtained by such person, in any legal proceeding, trial or investigation before any government unit.

42 Pa.C.S.A. § 5942(a). The Pennsylvania Supreme Court has held that the statute protects not only the identity of confidential sources but also “documents, inanimate objects and all sources of information.” In re Taylor, 412 Pa. 32, 40, 193 A.2d 181, 185 (1963) (emphasis original). The court reasoned that the shield law embodies a public policy supporting extensive protection of news sources. In order to effectuate that policy, the court declared, the law must be liberally interpreted in favor of the news media. Id. at 40-42, 193 A.2d at 185-86.

The Pennsylvania Supreme Court has recently asserted that the shield law gives media defendants extensive protection from discovery in civil libel cases. Hepps v. Philadelphia Newspapers, Inc., — Pa. —, —, 485 A.2d 374, 386-87 (1984) (Hepps II). Accord Lal v. CBS, Inc., 726 F.2d 97 (3d Cir.1984); Steaks Unlimited v. Deaner, 623 F.2d 264 (3d Cir.1980); Mazzella v. Philadelphia Newspapers, Inc., 479 F.Supp. 523 (E.D.N.Y.1979) (applying Pennsylvania’s shield law); Hepps v. Philadelphia Newspapers, Inc., 3 Pa.D. & C.3d 693, 707 (C.P. Chester County 1977) (Hepps I) (Taylor “establishes the privilege against disclosure as absolute”). The Court of Appeals for the Third Circuit, recognizing the breadth of the Pennsylvania shield law, has held that unpublished portions of a filmed interview are privileged even though the identity of the primary source has been revealed. Steaks Unlimited, 623 F.2d at 279. The court reasoned that the shield law, as interpreted by Taylor, protects secondary as well as primary sources of news. A reporter need not show that unidentified secondary sources actually exist. Under Taylor, the statutory privilege applies whenever forced disclosure of an unpublished statement or “outtake” may reveal the identity of other sources. Id. (citing Taylor, 412 Pa. at 43, 193 A.2d at 186). The same reasoning mandates protection of a reporter’s notes and resource materials from discovery. Lal v. CBS, Inc., 726 F.2d at 100-01; Mazzella v. Philadelphia Newspapers, Inc., 479 F.Supp. at 528-29.

Consistently with the liberal, pro-media approach required by Hepps II and Taylor, information concerning defendant’s editorial processes must also be protected from discovery. To permit an inquiry into reporters’ thought processes and methods of developing a news presentation would undermine the expansive protection which the shield law provides for newsgathering activities. As the New Jersey Supreme Court stated in holding editorial processes to be protected by a shield law similar to Pennsylvania’s: “Discovery of editorial processes is especially threatening to news-persons because it inhibits the exchange of ideas that is crucial to the functioning of a free and vigorous press.” Maressa v. New Jersey Monthly, 89 N.J. 176, 188, 445 A.2d 376, 383, cert. denied, 459 U.S. 907, 103 S.Ct. 211, 74 L.Ed.2d 169 (1982).

Plaintiffs challenge the validity of the shield law under both the Pennsylvania and United States Constitutions. Plaintiffs cite Pa. Const. art. V, § 10(c), which authorizes the Pennsylvania Supreme Court “to prescribe general rules governing practice, procedure and the conduct of all courts.” Characterizing the shield law as a rule of evidence and thus as procedural, plaintiffs contend that the legislature unconstitutionally usurped judicial power by enacting the law. Under Pennsylvania law, however, the legislature may “create or alter rules of evidence.” Rich Hill Coal Co. v. Bashore, 334 Pa. 449, 485, 7 A.2d 302, 319 (1939). See also Phillips v. Unemployment Compensation Board of Review, 152 Pa.Super.Ct. 75, 82, 30 A.2d 718, 723 (1943); Williams v. American Broadcasting Cos., 96 F.R.D. 658, 666 (W.D.Ark.1983) (it is well established that recognition of a journalist’s privilege is for the legislature.) If I were to accept plaintiffs’ argument, I must invalidate Pennsylvania’s longstanding practice of establishing rules of evidence and privilege by legislative action. I will not interpret Pennsylvania’s constitution to require such a result.

Plaintiffs also argue that the shield law, as defendant interprets it, violates the due process guarantees of the Pennsylvania and United States Constitutions. Under the Pennsylvania constitution, protection of one’s reputation is a fundamental right. Pa. Const, art. I, § 1. Although the constitution guarantees freedom of speech, it provides that a citizen is “responsible for the abuse of that liberty.” Id. § 7. The state’s due process clause specifically provides for vindication of reputational interests in the courts: “All courts shall be open; and every man for an injury done him in his ... reputation shall have remedy by due course of law.” Id. § 11.

Plaintiffs note that in order to prevail in this lawsuit they must prove defendant published false statements with “actual malice.” They claim that if they are barred from investigating defendant’s outtakes, sources and editorial processes, they will be prevented from satisfying their heavy burden. Thus, they claim, the shield law in effect makes it impossible for libel victims to recover and grants the media an absolute license to defame. They urge that such a result cannot be reconciled with the Fifth and Fourteenth Amendments to the United States Constitution or with Pennsylvania’s constitutional right to vindicate one’s reputation in the courts.

The Third Circuit has rejected the argument that a privilege which limits a plaintiff’s ability to uncover evidence in a defamation case deprives him of access to the courts. Samuelson v. Susen, 576 F.2d 546, 553 (3d Cir.1978). In Samuelson, plaintiff was allegedly defamed during a medical review committee’s proceedings. Such proceedings were privileged under an applicable Ohio statute. Plaintiff argued that the statute violated his Fifth and Fourteenth Amendment due process rights by depriving him of information central to his cause of action and in effect denying him access to the courts. Id. at 552. The Third Circuit upheld the state legislature’s right to establish privileges in order to further important public interests. The court stated: “No doubt the statutory provisions affect the manner in which plaintiff may develop evidence to support his defamation claim. Plaintiff is not, however, foreclosed from prosecuting his claim with other evidence, both direct and circumstantial.” Id. at 553. Plaintiff’s due process argument, according to the court, was “attenuated.” Id. Similarly, the Court of Appeals for the District of Columbia Circuit has held that there is “no due process right to offer evidence barred by the attorney-client privilege,” even if the evidence is necessary to establish a defamation claim. Rosen v. NLRB, 735 F.2d 564, 577 (D.C.Cir.1984). The court reasoned:

The attorney-client privilege is but one of several privileges that prevent parties themselves from adducing particular evidence, and thus create an obstacle to fact finding due to the broad judgment that the value of introducing such evidence is outweighed by the harm inflicted upon other policies and values. The explicit burdens imposed by such evidentiary rules have never, to our knowledge, been held inconsistent with due process in the civil law context, because such burdens are simply a necessary consequence of society’s attempt to balance the value of the complete admissibility of probative evidence with other competing values, such as the protection of vital professional or associational relationships.

Id. at 572. See also Branzburg v. Hayes, 408 U.S. 665, 706, 92 S.Ct. 2646, 2669, 33 L.Ed.2d 626 (1972) (states may recognize a journalist’s privilege, “either qualified or absolute”).

The fact that protection of reputation is a fundamental right in Pennsylvania does not change the result. The supreme court of Pennsylvania, recognizing that even constitutional rights are subject to limitations, has held that certain public officials are absolutely immune from liability for defamation. Matson v. Margiotti, 371 Pa. 188, 88 A.2d 892 (1952). According to the court:

[N]either freedom of speech nor freedom to protect one’s property and reputation — each of which is guaranteed by the [Pennsylvania] Constitution — is unlimited, and it is obvious that they must sometimes be competing and conflicting.... Even though the innocent may sometimes suffer irreparable damage, it has been found to be in the public interest and therefore sounder and wiser public policy to “immunize” public officials [from liability for defamation].

Id. at 202-03, 88 A.2d at 899. See also Hepps v. Philadelphia Newspapers, Inc., — Pa. —, —, 485 A.2d 374, 380 (1984). The Third Circuit in Steaks Unlimited v. Deaner, 623 F.2d 264, 277 n. 62 (3d Cir. 1980), recognized that by protecting a media defendant’s outtakes from discovery it was depriving the plaintiffs of important evidence. The court held, however, that it was bound by the Pennsylvania legislature’s decision to provide broad protection to news sources. Id. at 279. According to the court, “to the extent a state chooses to authorize a cause of action for defamation, it may also limit the plaintiff’s ability to prove his claim in order to promote other social purposes.” Id. at 279 n. 74.

Pennsylvania, like other jurisdictions, has established a number of conditional and absolute privileges applicable in defamation actions. Plaintiffs would have me second-guess the state’s policy decisions and strike down an entire class of laws on the basis of an argument which the Third Circuit has characterized as “attenuated.” I decline to do so.

Under Pennsylvania’s shield law, defendant cannot be compelled to disclose information concerning outtakes, sources, or editorial processes. Plaintiffs also seek discovery with respect to the factual bases for the broadcast and defendant’s efforts to verify its information. A review of the exhibits to plaintiffs’ memorandum shows that plaintiffs have requested, and defendant has supplied, extensive material concerning defendant’s investigation and the bases for the allegedly defamatory statements. Plaintiffs have not identified any specific factual information, other than that protected by the shield law, which defendant has failed to provide. Accordingly, plaintiffs’ motion to compel discovery must be denied.

II.

Defendant Westinghouse has moved for summary judgment, claiming that the allegedly defamatory statements are not actionable and that plaintiffs cannot prove actual malice. Defendant’s memorandum of law analyzes the broadcast statement by statement, purporting to show that the broadcast consisted of indisputably true statements, videotapes of actual occurrences, and protected expressions of opinion. In particular, Westinghouse defends the statement that Coughlin was carrying an envelope as an expression of I-Team reporters’ subjective opinion. Defendant claims plaintiffs have produced no evidence from which it can be inferred that any KYW employee did not believe the statements in the broadcast to be true. Plaintiffs cannot, therefore, prove that defendant published the allegedly defamatory statements with “actual malice.”

Plaintiffs claim that defendant has attempted to disguise the defamatory impact of the broadcast as a whole by analyzing each statement apart from its context. According to plaintiffs, the film segments and accompanying narrative defamed Officer Coughlin by strongly implying that he had accepted a bribe. Plaintiffs also assert that Coughlin is not a “public official” for the purposes of New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), and thus need not prove malice in order to prevail. Plaintiffs argue, however, that the record contains ample evidence of malice. They claim that I-Team reporters were hostile toward the police because of earlier confrontations between members of the I-Team and the police department, and that the investigation on American Street arose from a desire to discover official corruption. Reporters filmed police activities which could conceivably be interpreted as suspicious, and developed a broadcast on the basis of those activities. Although the I-Team’s observations were made in October of 1981, and the broadcast was not aired until February of 1982, plaintiffs claim reporters made no realistic effort to determine whether innocent explanations existed for the videotaped activities. Plaintiffs also assert that the I-Team, in developing the broadcast, relied solely upon sources biased against the police and the Ukrainian-American Club.

Plaintiffs claim that a minimal investigation would have revealed that on October 11, 1981, Officer Coughlin was a rookie policeman patrolling alone for the first time. Early in his shift, he was ordered to investigate a vandalism complaint at the Ukrainian-American Club. After talking to the club’s steward, he returned to his patrol car and filled out a “48” book, used by police to file incident reports. He attributes his difficulty in starting the car to the fact that he had never driven a patrol car before that night. Plaintiffs object to the broadcast statement that the officer in car 35 did not appear to be Coughlin. According to plaintiffs, this statement implied that Coughlin had someone else surreptitiously take his place and fill out his reports while he was somewhere else, perhaps inside the club.

At approximately 2:45 a.m. on October 11, Coughlin was ordered to check several private clubs outside his assigned patrol area to ensure compliance with city liquor laws. He had never performed a club check before, and one of his fellow officers had to explain his duties to him in detail. At 3:57, after checking the clubs, he reported over police radio that he was returning to headquarters. He then turned in his club check reports at headquarters and was sent to determine whether the Ukrainian-American Club had already been checked by another officer. Coughlin explains the events which the I-Team described as “suspicious” as follows: When he arrived at American Street, he saw another police officer driving away. He followed in order to ask whether the officer had checked the Ukrainian-American Club. After losing sight of the patrol car, he returned to the club. He went inside, learned that another officer had just checked the club, and left immediately. He claims that the object in his hand was a 48 book. He also asserts that the officers in his district were not required to wear uniform jackets that night.

Coughlin describes the I-Team’s attempt to interview him on February 10, 1982, as an “ambush.” According to Coughlin, when he returned from work early that morning two men confronted him outside his house. One was operating a television camera and the other began to question Coughlin about his activities on October 11, 1981. Coughlin claims he was unnerved by the camera and by the abrupt questioning. The reporters refused to turn the camera off, and Coughlin therefore refused to answer their questions.

In order to be entitled to summary judgment, defendant must show that there is “no genuine issue as to any material fact” and that it is “entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The first question presented by defendant’s summary judgment motion is whether the challenged statements are capable of a defamatory meaning. Under Pennsylvania law, “[a] communication is defamatory if it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.” Corabi v. Curtis Publishing Co., 441 Pa. 432, 442, 273 A.2d 899, 904 (1971) (quoting Restatement of Torts § 559 (1938)). The allegedly defamatory statements must be read in context:

The test is the effect the [communication] is fairly calculated to produce, the impression it would naturally engender, in the minds of the average persons among whom it is intended to circulate. The words must be given by judges and juries the same signification that other people are likely to attribute to them.

Id. at 447, 273 A.2d at 907 (quoting Boyer v. Pitt Publishing Co., 324 Pa. 154, 157, 188 A. 203, 204 (1936)). Accord Marcone v. Penthouse International, 754 F.2d 1072, 1078 (3d Cir.1985).

Defendant’s broadcast is clearly capable of a defamatory meaning. The broadcast outlined the apparent law enforcement problems on American Street and, quoting a 1974 Pennsylvania Crime Commission Report, characterized the situation as “ripe for corruption.” The narrator described the police activities filmed on October 11, 1981, as “the most suspicious activity we saw on American Street.” The subsequent films and descriptions of Officer Coughlin, considered in the context of the entire broadcast, are reasonably susceptible to the interpretation that Coughlin accepted a bribe. The I-Team’s presentation of its attempt to interview him reinforced the implication that he was evasive and therefore guilty of corrupt activities. Because I conclude that the broadcast is capable of a defamatory meaning, it would be for a jury to determine whether that meaning was conveyed to the broadcast’s audience. Corabi, 441 Pa. at 442, 273 A.2d at 904.

Defendant also seeks summary judgment on the ground that the broadcast was substantially true. Defendant argues that each allegedly defamatory statement was either true or a protected expression of opinion. Under Pennsylvania law, however, allegedly defamatory words must be read in context. Pierce v. Capital Cities Communications, Inc., 576 F.2d 495, 502 (3d Cir.), cert. denied, 439 U.S. 861, 99 5. Ct. 181, 58 L.Ed.2d 170 (1978). The literal accuracy of individual statements will not insulate a defendant from liability where the overall impression left by those statements is false. According to the Pennsylvania Superior Court, “ ‘true facts’ that in context imply a falsehood are, in an action for defamation, not ‘true.’ ” Dunlap v. Philadelphia Newspapers, Inc., 301 Pa.Super.Ct. 475, 491, 448 A.2d 6, 15 (1982). Thus, it is not sufficient for defendant “ ‘to take every sentence separately and demonstrate its individual accuracy, detached and wrenched out of context.’ ” Id. at 493, 448 A.2d at 15-16 (quoting Clark v. Pearson, 248 F.Supp. 188, 191 (D.D.C.1965)).

I have already determined that the broadcast can reasonably be construed as implying that Officer Coughlin was involved in corrupt activities. Plaintiffs have presented evidence, including the affidavit of Coughlin himself and the testimony of other police officers, that this implication was false. Defendant has not seriously challenged plaintiffs’ explanation for the events of October 11, 1981. In fact, on February 20, 1982, KYW aired a follow-up program during which the president of the Fraternal Order of Police presented Coughlin’s version of those events. I conclude that there is a genuine issue of fact concerning the truthfulness of those segments of the broadcast dealing with Coughlin.

Defendant’s final argument is that plaintiffs must show “actual malice” on its part in order to prevail. Defendant contends that the record contains no evidence of malice, and that it is therefore entitled to summary judgment. Plaintiffs claim that Officer Coughlin, the target of the alleged defamation, is not a public official required to prove malice under New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 725-26, 11 L.Ed.2d 686 (1964).

Courts have consistently treated police officers as public officials within the meaning of New York Times. See, e.g., Time, Inc. v. Pape, 401 U.S. 279, 284, 91 S.Ct. 633, 636, 28 L.Ed.2d 45 (1971); St. Amant v. Thompson, 390 U.S. 727, 730, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968); Henry v. Collins, 380 U.S. 356, 85 S.Ct. 992, 13 L.Ed.2d 892 (1965); Cibenko v. Worth Publishers, 510 F.Supp. 761, 765 (D.N.J.1981); Dunlap v. Philadelphia Newspapers, Inc., 301 Pa.Super.Ct. 475, 493-94, 448 A.2d 6, 16 (1982). Police officers qualify as public officials because:

They “have or appear to the public to have, substantial responsibility for or control over the conduct of governmental affairs,” ... and their position “has such apparent importance that the public has an independent interest in the qualifications and performance of the person who holds it, beyond the general public interest in the qualifications and performance of all government employees....” ... The cop on the beat is the member of the department who is most visible to the public. He possesses both the authority and the ability to exercise force. Misuse of his authority can result in significant deprivation of constitutional rights and personal freedoms, not to mention bodily injury and financial loss. The strong public interest in ensuring open discussion and criticism of his' qualifications and job performance warrant the conclusion that he is a public official.

Gray v. Udevitz, 656 F.2d 588, 591 (10th Cir.1981) (quoting Rosenblatt v. Baer, 383 U.S. 75, 85-86, 86 S.Ct. 669, 675-76, 15 L.Ed.2d 597 (1966)) (citations omitted).

Officer Coughlin is a public official and the broadcast related to his official conduct. Plaintiffs must therefore prove that defendant aired the broadcast with “actual malice,” that is, “with knowledge that it was false or with reckless disregard of whether it was false or not.” New York Times, 376 U.S. at 279-80, 84 S.Ct. at 726.

Plaintiffs argue that the I-Team’s hostility toward the police, its reliance on biased sources and its failure to investigate establish the existence of actual malice. Viewing the evidence in the light most favorable to plaintiffs, as I must under Fed.R.Civ.P. 56, I agree that defendant’s reporters showed little concern for the truth when they developed “After Hours on American Street.” I cannot conclude, however, that plaintiffs have set forth sufficient evidence of malice to withstand defendant’s motion for summary judgment.

Under St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968), the evidence must “permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.” (Emphasis added.) Malice cannot be inferred from a reporter’s general hostility toward or bias against a subject. National Association of Letter Carriers v. Austin, 418 U.S. 264, 281, 94 S.Ct. 2770, 2779, 41 L.Ed.2d 745 (1974) (“hatred, spite, ill will, or desire to injure” is not an element of the malice required by New York Times); Rebozo v. Washington Post Co., 637 F.2d 375, 380 (5th Cir.), cert. denied, 454 U.S. 964, 102 S.Ct. 504, 70 L.Ed.2d 379 (1981). Absent a showing of reckless indifference to the-truth, evidence that an investigation was “designed to confirm a hostile premise rather than to find the truth” does not establish malice. Westmoreland v. CBS Inc., 596 F.Supp. 1170, 1173 (S.D.N.Y. 1984). Accord Herbert v. Lando, 596 F.Supp. 1178, 1224-26 (S.D.N.Y.1984). As Judge Leval noted in Westmoreland, “[Reporters of course investigate where their suspicions lie. A previously formed belief rebuts as much as it establishes constitutional malice, as it tends to demonstrate sincerity.” 596 F.Supp. at 1174. Evidence of failure to investigate, even if it establishes that defendant was indifferent to the truth of an allegedly defamatory communication, is also insufficient to show that defendant acted with malice. St. Amant, 390 U.S. at 733, 88 S.Ct. at 1326; Marcone v. Penthouse International, 754 F.2d 1072, 1089-1090 (3d Cir.1985); Dickey v. CBS, Inc., 441 F.Supp. 1133, 1141 (E.D. Pa.1977), aff’d, 583 F.2d 1221 (3d Cir.1978).

Defendant’s employees, by affidavit and in deposition testimony, assert that the allegedly defamatory statements consisted of inferences drawn from observed facts and accurate reports of complaints made by the Ukrainian-Ameriean Club’s neighbors. They claim they honestly believed the officer who dealt with the club’s vandalism complaint at 12:50 a.m. on October 11, 1981, was not Coughlin, and that the object in Coughlin’s hand when he left the club shortly after 4:00 a.m. was an envelope. In addition, they claim that they merely presented their perceptions as to the facts, and left the audience to draw its own conclusions based upon the film clippings and accompanying narrative.

The absence of intent to defame, of course, does not shield a defendant from liability for defamation. St. Am-ant, 390 U.S. at 732, 88 S.Ct. at 1326. Moreover, a jury could clearly find that the I-Team was at least aware that the broadcast could be interpreted as implicitly accusing Coughlin of corrupt activities. The evidence which would support such a finding, however, would not support a finding that defendant’s employees did not believe their implicit accusations were true, or that they acted with reckless disregard for the truth. Plaintiffs have not set forth evidence sufficient to create an issue as to whether defendant’s statements were “so inherently improbable that only a reckless man would have put them in circulation.” Id. In fact, the evidence relevant to the state of mind of defendant’s employees indicates that, although they did not seriously explore other possible explanations for Coughlin’s behavior, the conclusions which they drew based on their observations were reasonable.

The I-Team’s investigation began as the result of persistent complaints concerning illegal and disruptive activities at the club. Reporters observed activities which they felt were inconsistent with proper law enforcement. Their suspicions were reinforced by a 1974 Pennsylvania Crime Commission report, which noted the potential for corruption that exists when police officers monitor private clubs. Barbara Bailey, an attorney who supervised the Crime Commission’s 1974 investigation, confirmed that the activities shown in the I-Team’s videotapes were similar to activities which had raised the Crime Commission’s suspicions in 1974.

Representatives of the Philadelphia Police Department also agreed that the activities videotaped on October 11 raised questions concerning whether the police officers involved were performing their duties. Deputy Police Commissioner Robert Armstrong was sufficiently concerned with the possibility of corruption that he ordered an internal investigation of Coughlin’s activities. Commissioner Armstrong testified at his deposition that he personally believed the I-Team’s films showed Coughlin with a 48 book in his hand. He stated, however, that it was not unreasonable to conclude that the object in Coughlin’s hand was an envelope. In fact, he noted that the police department, after conducting interviews and laboratory tests and consulting with the FBI, had been unable to reach an official conclusion concerning the object’s identity. In addition, Commissioner Armstrong, together with other members of the Philadelphia Police Department, testified that Coughlin had not followed department procedures with respect to his log book entries and his uniform.

As I have already determined, a jury could find that Coughlin’s actions were due to inexperience, not corruption. An issue also exists as to whether the I-Team, with a minimum of effort, could have discovered the truth. The Supreme Court’s mandate, however, is clear: “reckless conduct is not measured by whether a reasonably prudent man would have published, or would have investigated before publishing.” St. Am-ant, 390 U.S. at 731, 88 S.Ct. at 1325. The evidence in this case would not support a finding that the I-Team’s interpretation of Coughlin’s behavior as indicative of corruption was so unreasonable as to give rise to an inference of actual malice. See Mar-cone, at 1091 (actual malice not shown when “mistakes appear to be the result of insufficient editorial verification and checking procedures, but not of a conscious decision to present [plaintiff] in a false light.”) The fact that the broadcast was not “hot news” and defendant had time to investigate is not sufficient to demonstrate the existence of malice. See Dickey v. CBS, Inc., 583 F.2d 1221, 1228 n. 9 (3d Cir.1978); Barger v. Playboy Enterprises, 564 F.Supp. 1151, 1156 (N.D.Cal.1983), aff’d mem., 732 F.2d 163 (9th Cir.), cert. denied, — U.S. —, 105 S.Ct. 175, 83 L.Ed.2d 110 (1984). The Supreme Court in St. Amant v. Thompson, 390 U.S. at 731-32, 88 S.Ct. at 1326, noted that its definition of malice as subjective awareness of falsity:

may be said ... [to] put[ ] a premium on ignorance, encourage[] the irresponsible publisher not to inquire, and permit[ ] the issue to be determined by the defendant’s testimony that he published the statement in good faith and unaware of its probable falsity. Concededly the reckless disregard standard may permit recovery in fewer situations than would a rule that publishers must satisfy the standard of the reasonable man or the prudent publisher. But New York Times and succeeding cases have emphasized that the stake of the people in public business and the conduct of public officials is so great that neither the defense of truth nor the standard of ordinary care would protect against self-censorship and thus adequately implement First Amendment policies. Neither lies nor false communications serve the ends of the First Amendment, and no one suggests their desirability or further proliferation. But to insure the ascertainment and publication of the truth about public affairs, it is essential that the First Amendment protect some erroneous publications as well as true ones.

I note that the parties have presented opposing viewpoints as to the propriety of granting summary judgment where the presence of “actual malice” is at issue. Defendant argues that, because interests protected by the First Amendment are at stake, summary judgment is particularly appropriate. Defendant quotes Bose Corp. v. Consumers Union, — U.S. —, —, 104 S.Ct. 1949, 1965, 80 L.Ed.2d 502 (1984):

The question whether the evidence in the record in a defamation case is of the convincing clarity required to strip the utterance of First Amendment protection is not merely a question for the trier of fact. Judges, as expositors of the Constitution, must independently decide whether the evidence in the record is sufficient to cross the constitutional threshold that bars the entry of any judgment that is not supported by clear and convincing proof of “actual malice.”

Plaintiffs rely upon Hutchinson v. Proxmire, 443 U.S. 111, 120 n. 9, 99 S.Ct. 2675, 2680 n. 9, 61 L.Ed.2d 411 (1979), for the proposition that “proof of ‘actual malice’ calls a defendant’s state of mind into question ... and does not readily lend itself to summary disposition.”

I am not persuaded that the special proof requirements enunciated in Bose should apply at the summary judgment stage. Bose dealt with the function of an appellate court reviewing a finding of actual malice in a defamation case. The Supreme Court held that the sensitive constitutional interests at stake necessitated stringent and independent appellate review. The court’s role is different at the summary judgment stage, which involves a preliminary inquiry into whether a plaintiff has raised triable issues of fact. Plaintiffs should not be compelled in effect to prove their entire case before trial. See Liberty Lobby, Inc. v. Anderson, 746 F.2d 1563, 1570-71 (D.C. Cir.1984).

The question remains, however, whether under New York Times Co. v. Sullivan I must consider even the preliminary matter before me in light of plaintiff’s ultimate burden of proof. See 376 U.S. at 285-88, 84 S.Ct. at 728-30 (public official plaintiff must prove malice with “convincing clarity;” evidence which would support a finding of negligence may be insufficient to support a finding of actual malice). A number of courts have held that the degree of evidence which plaintiffs must present will affect defendant’s ability to show, as required by Fed.R.Civ.P. 56, that no genuine issues of material fact exist. Under this approach, the propriety of granting summary judgment depends upon whether, “viewing the evidence and all inferences arising therefrom in the light most favorable to the plaintiff, there appears a genuine issue of fact from which a jury could reasonably find actual malice with convincing clarity.” Brophy v. Philadelphia Newspapers, Inc., 281 Pa.Super.Ct. 588, 601, 422 A.2d 625, 632 (1980). Accord Yiamouyiannis v. Consumers Union, 619 F.2d 932, 940 (2d Cir.), cert. denied, 449 U.S. 839, 101 S.Ct. 117, 66 L.Ed.2d 46 (1980); Bryant v. Associated Press, 595 F.Supp. 814, 818 (D.V.I.1984); Nader v. de Toledano, 408 A.2d 31, 49-50 (D.C.1979), cert. denied, 444 U.S. 1078, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980).

It is difficult to determine from the single footnote in Hutchinson v. Proxmire, 443 U.S. at 120 n. 9, 99 S.Ct. at 2680 n. 9, how the Supreme Court will ultimately decide this issue. I interpret that footnote, however, as indicating that courts should not form what amounts to a presumption favoring summary judgment in order to protect a defendant’s First Amendment rights. See Steaks Unlimited v. Deaner, 623 F.2d 264, 275 n. 56 (3d Cir.1980). I do not believe that the Supreme Court intended to preclude the use of summary judgment, when appropriate under a neutral application of Rule 56, to dispose of “potentially frivolous suits that threaten First Amendment freedoms.” Brophy, 281 Pa. Super.Ct. at 599, 422 A.2d at 631. Defendant Westinghouse has shown, as required by Rule 56, that no genuine issues of material fact exist. I will therefore grant defendant’s motion for summary judgment.

Defendant is also entitled to summary judgment with respect to plaintiffs’ remaining claims. Because Coughlin is a public official, plaintiffs must prove malice on defendant’s part in order to prevail on their claim that the broadcast portrayed Coughlin in a false light. See Time, Inc. v. Hill, 385 U.S. 374, 390, 87 S.Ct. 534, 543,17 L.Ed.2d 456 (1967); Goldman v. Time, Inc., 336 F.Supp. 133, 137-38 (N.D.Cal. 1971); Restatement (Second) of Torts § 652E(b) & comment d (1977). My determination that the evidence would not support a finding of malice requires that I grant summary judgment as to plaintiffs’ false light claim. Plaintiffs’ claim for punitive damages falls on the same basis. Gertz v. Robert Welch, Inc., 418 U.S. 323, 349-50, 94 S.Ct. 2997, 3011-12, 41 L.Ed.2d 789 (1974) (plaintiff must prove malice in order to recover punitive damages). Similarly, I do not perceive sufficient evidence to support plaintiffs’ claim that defendant is liable for intentional infliction of emotional distress. Liability for emotional distress can be found “only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Restatement (Second) of Torts § 46 comment d (1977). Even proof of malice or intent to inflict emotional distress is an insufficient basis for liability. Because the evidence would not support a finding that defendant’s conduct was extreme or outrageous, I must grant summary judgment as to plaintiffs’ claim for emotional distress. Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1274 (3d Cir.1979).

Defendant has also demonstrated that no genuine issue of fact exists with respect to plaintiffs’ claim for invasion of privacy. Under Pennsylvania law, an invasion of privacy action can be brought on any one of four grounds: “(1) intrusion upon seclusion, (2) appropriation of name or likeness, (3) publicity given to private life, and (4) publicity placing a person in a false light.” Martin v. Municipal Publications, 510 F.Supp. 255, 259 (E.D.Pa. 1981). Accord Vogel v. W.T. Grant Co., 458 Pa. 124,129 n. 9, 327 A.2d 133,136 n. 9 (1974). Plaintiffs allege that defendant’s broadcast is actionable on the third and fourth grounds. I have already determined that plaintiffs’ false light claim is not viable. Plaintiffs’ claim that defendant publicized Coughlin’s private life must also fall, because the broadcast dealt with Coughlin’s public activity as a police officer. A police officer’s on-the-job activities are matters of legitimate public interest, not private facts. A publication dealing with those activities thus cannot be the basis for an invasion of privacy action. Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 492-95, 95 S.Ct. 1029, 1044-46, 43 L.Ed.2d 328 (1975); Restatement (Second) of Torts § 652D & comments b, d (1977).

Finally, because I have determined that James Coughlin has no viable claim against defendant, Patricia Coughlin’s derivative claims must also fall. A wife’s claim for loss of her husband’s consortium depends upon proof that an actionable wrong was committed against her husband. Little v. Jarvis, 219 Pa.Super.Ct. 156, 162, 280 A.2d 617, 620 (1971). See also Goodman v. Mead Johnson & Co., 534 F.2d 566, 574 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). Defendant is therefore entitled to summary judgment with respect to Patricia Coughlin’s claims.

III.

The task of balancing plaintiffs’ interest in vindicating James Coughlin’s reputation against defendant’s First Amendment rights is a difficult one. With respect to plaintiffs’ discovery motion, however, the balance has already been struck in defendant’s favor by the Pennsylvania Shield Law. Because of the broad privilege which the shield law grants to media defendants in defamation cases, I must deny plaintiffs’ motion to compel discovery. Moreover, I am constrained under recent Supreme Court and Third Circuit precedent to conclude that no genuine issues of fact remain in this case and that defendant is entitled to a judgment as a matter of law. I will therefore grant defendant’s motion for summary judgment.

      . Since the allegedly defamatory statements were broadcast in Pennsylvania and the alleged target is a Pennsylvania citizen, I see no reason to reject the parties’ apparent assumption that Pennsylvania law applies in this diversity action. Under Fed.R.Evid. 501, therefore, questions of privilege must be determined in accordance with Pennsylvania law.

      . My decision to deny plaintiffs’ motion is based on the privilege established by Pennsylvania’s shield law. I therefore need not determine whether the information requested is privileged under the First Amendment. See Lal v. CBS, Inc., 726 F.2d 97, 100-01 (3d Cir.1984).

      . The decision in Taylor was based on an earlier version of the shield law. The current version, however, is "virtually identical" to the former statute. Lal, 726 F.2d at 100.

      . Section 1 provides: "All men ... have certain inherent and indefeasible rights, among which are those of ... acquiring, possessing and protecting property and reputation.”

      . New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 725-26, 11 L.Ed.2d 686 (1964), requires proof of actual malice because, as I conclude in the second section of this opinion, plaintiff James Coughlin is a public official. If Coughlin were not a public official for New York Times purposes, as plaintiffs contend, plaintiffs concede that they must prove malice in order to recover punitive damages. Gertz v. Robert Welch, Inc., 418 U.S. 323, 349-50, 94 S.Ct. 2997, 3011-12, 41 L.Ed.2d 789 (1974).

      . The Pennsylvania Supreme Court has recently held, in a defamation case involving a private figure plaintiff, that the defendant bears the burden of proving an allegedly defamatory statement to be true. Hepps v. Philadelphia Newspapers, Inc., — Pa. —, 485 A.2d 374 (1984). Although it is arguable that Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), requires the plaintiff, at least when plaintiff is a public official or public figure, to bear the burden of proving falsity, I need not decide the issue at this time. Regardless of which party bears the burden of proof, there is a genuine issue of fact as to the truth or falsity of the broadcast.

      . Plaintiffs, relying upon Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), argue that Coughlin is not a “public official” because he did not thrust himself into a public controversy and does not have significantly greater access to the media than a private citizen has. Under Gertz, however, those factors are relevant only to the question of whether a plaintiff who does not qualify as a public official is a "public figure." Id. at 351-52, 94 S.Ct. at 3012-13. Because I conclude that Coughlin is a public official under New York Times, I need not reach the question of whether he is a public figure.

      . Even if hostility were a factor in determining malice, I perceive little, if any, evidence in the record that the I-Team’s investigation was motivated by ill will. Plaintiffs’ claim that hostility existed is undercut by the consistent testimony of both KYW personnel and police officers that, despite occasional differences of opinion, the relationship between KYW and the police department was basically amicable.

      . See Deposition of Pasquale L. Polillo at 85-87 (May 3, 1984). Polillo, the General Manager of KYW-TV, gave final approval to the broadcast. Plaintiffs contend that Polillo admitted defendant knew the broadcast’s implications concerning Coughlin were false, but aired the broadcast for the sake of "impact.” I have reviewed Polillo’s testimony and find no support for plaintiffs’ interpretation. Polillo testified that he had not felt it necessary to verify what was in Coughlin's hand, because the public could "make up its own mind” concerning what the videotape showed. He also stated, however, that he had had no basis for suspecting anything in the broadcast to be inaccurate, and that he had personally believed that Coughlin was holding an envelope. Although Polillo’s remarks may show that defendant did not conduct a thorough investigation, they cannot reasonably be construed to show that defendant acted with reckless disregard of the truth.


author: LITTLE, District Judge.

text:
    Mary K. KELLY v. T.L. JAMES CO., INC., et al.
    Civ. A. No. 82-2982.
    United States District Court, W.D. Louisiana, Monroe Division.
    Feb. 28, 1985.

      H. Alva Brumfield III of Brumfield & Brumfield, Baton Rouge, La., for Mrs. Kelly.
    Randolph J. Waits, New Orleans, La., for T.L. James.
   RULING

LITTLE, District Judge.

The very narrow issue presented by defendants’ motion to dismiss for failure to state a claim upon which relief can be granted, F.R.C.P. 12(b)(6), is:

Does a child domiciled in Louisiana have a cause of action for loss of society due to the non-fatal injury of the child’s parent, which injury was suffered by the parent as a seaman and for which the parent has filed a claim in federal court under the Jones Act and general maritime law and to which the child’s claim is appended.

A brief review of the allegations of the plaintiff’s petition is appropriate. Mary Kelly, an admitted seaman, was allegedly injured when she fell on the stairs of a vessel which was located on the navigable waters of the Calcasieu River Basin in the State of Louisiana. The date of the alleged injury was 21 November 1982. Mrs. Kelly filed suit against defendant employer in December of 1982 under “... the Constitution and laws of the United States of America, the General Maritime Law and the Jones Act, as well as the applicable laws of the State of Louisiana”. (Par. 2, plaintiff’s Complaint for Damages). In April of 1983, plaintiff amended her petition to include as parties plaintiff her minor son and three major children. The four children seek recovery from the defendants for mental pain, anguish, loss of love, consortium and affection as a result of the injuries suffered by their seaman mother. Their cause of action is based on the same sources as the claim of their mother, i.e., the Constitution and laws of the United States of America, the general maritime law and the Jones Act, as well as the applicable laws of the State of Louisiana. All parties are Louisiana domiciliaries.

The language used by the children to describe their claim can best be summarized in the interest of doing substantial justice, as a claim for loss of society and service due to the maritime injury suffered allegedly by their mother. The term “consortium” is used by the children. Technically, loss of consortium is applicable only to an interspousal relationship and includes loss of society. As was stated in Skidmore v. Grueninger, 506 F.2d 716 (5th Cir.1975) at 728:

“The interests involved in loss of society and loss of consortium are very- closely related. Indeed, the only difference between the two might be that loss of society involves those losses of intimacy and companionship which stem from the familial relationship, while loss of consortium involves loss of those similar interests which stem from the marital relationship.”

The right of a surviving spouse to recover for loss of consortium due to the death of a seaman under the general maritime law and the law of most states is now well established. See, Sea-Land Services v. Gaudet, 414 U.S. 573, 94 S.Ct. 806, 39 L.Ed.2d 9 (1974); La.C.C. Art. 2315. Such recovery, however, is not allowed under the Jones Act, 46 U.S.C. § 688, see, e.g., Smith v. Ithaca Corp., 612 F.2d 215, 223 (5th Cir.1980); Ivy v. Security Barge Lines, Inc., 606 F.2d 524 (5th Cir.1978) (en banc), or the Death on the High Seas Act, 46 U.S.C. §§ 761, et seq., see, Mobil Oil Corp. v. Higgenbotham, 436 U.S. 618, 98 S.Ct. 2010, 56 L.Ed.2d 581 (1978); Smith, supra. The right of a spouse to recover for loss of consortium due to the non-fatal injury of a seaman is also well established. See, American Export Lines, Inc. v. Alvez, 446 U.S. 274, 100 S.Ct. 1673, 64 L.Ed.2d 284 (1980) (general maritime law); Cruz v. Hendy Intern. Co., 638 F.2d 719, 721 (5th Cir.1981) (general maritime law); Coates v. Owens-Corning Fiberglas Corp., 444 So.2d 788 (La.App. 4th Cir.1984) (based on La. C.C. Art. 2315). The right of children to recover for loss of society due to the death of a seaman parent is allowed under the general maritime law and state law. See, Gaudet, supra (maritime); Glod v. Am. Pres. Lines, Ltd., 547 F.Supp. 183, 186 (N.D.Cal.1982) (maritime); La.C.C. Art. 2315. Is there a right for children to recover for loss of society and service for the non-fatal injury to a seaman parent?

In Madore v. Ingram Tank Ships, Inc., 732 F.2d 475 (5th Cir.1984), Judge Rubin made it perfectly clear that there can be no recovery by a child for loss of society with an injured parent under the Jones Act. His observations are worthy of note:

“Neither the Jones Act in terms nor any case cited to us permits recovery by a child for loss of the society of a living parent. An overwhelming majority of the courts that have considered such a claim under state tort law have rejected it, for various reasons. See Annot., 11 A.L.R. 4th 549 (1982). Some have relied on the argument that it is inherently speculative to attempt to determine how much society the child has lost if his parent lives and can continue to furnish parental guidance. Other factors mitigate against such an allowance: (1) the absence of any enforceable claim on the child’s part to the parent’s services; (2) the possible overlap of the parent’s recovery; and (3) the possibility of settlements made with parents being upset.” Page 479.

Therefore, to the extent that defendants’ motion pertains to the children’s claim for loss of society under the Jones Act, it is granted.

The quotation from Madore may have been intended to apply to general maritime law as well as Jones Act cases. Madore’s wife received $50,000 for loss of consortium and society (Madore, supra, p. 477) and that issue was not subject to appellate concern. Since Madore’s wife could not have received such an award under the Jones Act, one could conclude that her claim for loss of consortium and the claim of Madore’s son for loss of society were based upon general maritime law. Is that quoted analysis applicable to the issue initially presented in this ruling? We think not. While it is true that many states refuse to recognize the right asserted by the children in this case, it is also true that Louisiana has created the cause of action asserted by the children in this matter. La.C.C. Art. 2315. Some courts in the cases cited in the Madore opinion have relied on the argument that loss of society awards are speculative and difficult to determine. Those cases remain shaded by the Supreme Court decision of Sea-Land, Services v. Gaudet, supra. As pointed out in Gaudet, the argument that loss of society awards are speculative and difficult to determine is without merit. The Court noted that for years juries and judges have been called upon to assess equally speculative damages in determining awards for common law loss of consortium and society. 414 U.S. at 589-90, 94 S.Ct. at 817, 39 L.Ed.2d at 23-24. Moreover, the Court also noted that “appellate tribunals have amply demonstrated their ability to control excessive awards”. Id. U.S. at 590, 94 S.Ct. at 817, L.Ed.2d at 24. Thus, is the speculation and difficulty argument valid in a non-death case and invalid in a death case? We think not. To hold that a child can recover for loss of society only if the parent dies is beyond the spirit of Gaudet. It also seems incongruous to us to allow a spouse to recover in both death and non-death cases, but not the children. We are impressed with the opinion of Judge Rubin in Hamilton v. Canal Barge Co., Inc., 395 F.Supp. 978 (E.D.La.1975). Mr. Hamilton died as a result of injuries sustained in the course of maritime employment. He was a Jones Act seaman and left in his wake an intended wife and a posthumous child. The Court in Hamilton awarded the posthumous child $25,000 for the loss of his father’s society. The Court, through Judge Rubin, did not reduce the award when faced with evidence that the decedent’s fiancee had married and that the child had a foster parent. The Court hoped that the foster father would be a good foster parent but that that possibility would be too conjectural to be allowed to reduce the damages the posthumous child will more likely sustain. See Hamilton, supra at 987. If a court or jury can award loss of society damages to a posthumous child under the facts of Hamilton, we feel quite certain that a court or jury will be able to apply the same technique and award loss of society damages to a child in a non-fatal parental injury case. Being guided by the principle of maritime law that “certainly it better becomes the humane and liberal character of proceedings in admiralty to give than to withhold the remedy, when not required to withhold it by established and inflexible rules”, Gaudet, 414 U.S. at 583, 94 S.Ct. at 814, 39 L.Ed.2d at 20 (citations omitted) we hold that loss of society and services for a child with an injured parent is a compensable claim under the general maritime law. To this extent defendants’ motion is denied.

In view of the result we have reached, we do not decide whether the claims of the children for loss of society founded on La. C.C. Art. 2315, as amended in 1982, could be appended to the suit of the parent in a federal admiralty proceeding under the doctrine of pendent party jurisdiction.

MOTION DENIED.


author: GESELL, District Judge.

text:
    AMERICAN POSTAL WORKERS UNION, AFL-CIO, et al., Plaintiffs, v. UNITED STATES POSTAL SERVICE, Defendant.
    Civ. A. No. 84-909.
    United States District Court, District of Columbia.
    Feb. 28, 1985.

      Darryl J. Anderson, Anton Hajjar, Washington, D.C., for plaintiffs.
    Mitchell R. Berger, Asst. U.S. Atty., Washington, D.C., for defendant.
   MEMORANDUM

GESELL, District Judge.

This action by a discharged postal worker and his union seeks reinstatement and other relief on the ground that his discharge violated the First Amendment guarantee of free speech. A number of issues in the case have been resolved on two prior motions for summary judgment. The Court decided, among other things, that the speech of the discharged worker, Joseph Gordon, was constitutionally protected and that, assuming his speech caused the discharge, his interest in the speech outweighed the government’s interest in effectively carrying out its duties. American Postal Workers Union v. United States Postal Service, 598 F.Supp. 564, 570-72 (D.D.C.1984). Thus the remaining issue is whether Gordon’s speech was a substantial or motivating factor in the discharge, and if it was, whether the Postal Service would have fired Gordon even in the absence of his protected speech. Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 287, 97 S.Ct. 568, 576, 50 L.Ed.2d 471 (1977).

The Court ordered the case to proceed to trial on this issue. However, in lieu of presenting evidence, the parties stipulated all the underlying facts in the case, relying primarily on the record of an arbitration hearing where it was held that the discharge did not violate the union contract.

The Court has considered the stipulation of facts, the transcript of the arbitration hearing, and the entire record herein. This Memorandum constitutes its findings of fact and conclusions of law.

The essential facts of Gordon’s speech and the circumstances leading to his discharge are recounted at 598 F.Supp. at 566-67 and need not be reiterated in detail here. Suffice it to note that in a constitutionally protected column Gordon wrote for his union newspaper, Gordon purported to reveal conduct on the job that, if it had in fact occurred, he and his union admit would constitute a dischargeable offense. The conduct was reading a piece of mail while sorting mail and disclosing its contents. However, Gordon and his union maintain that the conduct described in the column did not occur and that the column was a fabrication for purposes of “literary license.”

The Postal Service has maintained consistently that it fired Gordon not for his speech but for the conduct revealed by his speech. The decision to fire Gordon was made by Howard Byrne, director of labor relations at the Royal Oak, Mich., post office. Byrne was told of the column by the postmaster and asked Charlene Bonds, Gordon’s general supervisor, to investigate. When Bonds brought the apparent violation to Gordon’s attention, Gordon told her that the piece of mail he discussed in his column, a fund-raising letter on behalf of the National Right to Work Committee by Congressman Phillip Crane, came to his attention outside his job from a friend who had seen the letter. He said he fabricated the story about finding the letter at work to dramatize the irony of unionized postal workers sorting mail for an anti-union organization. Bonds obtained a written statement from Gordon to the same effect. Gordon sent a brief retraction to be published in the next issue of the union newspaper, but his discharge preceded publication.

Bonds promptly wrote a report to Byrne recounting her meeting with Gordon and attaching a copy of his statement. However, she made no recommendation and did not say whether she believed the column or Gordon’s later statement. Upon receipt Byrne immediately drafted the letter of discharge. The only facts before him at the time of this decision were the newspaper column itself and Gordon’s written statement contradicting the column. The discharge notice stated that Gordon was being fired for violating the prohibition in the Domestic Mail Manual on “reading, divulging, or disclosing of the contents of mail,” a serious infraction even where as here third-class mail is involved.

At the first stage of the subsequent grievance proceeding on the discharge, supervisor Linda Dunlap asked Gordon if he could produce his friend who had seen the Crane letter to corroborate Gordon’s story. Gordon told her the friend “did not want to get involved.” The friend later testified at the arbitration hearing, giving an account consistent with Gordon’s. Other testimony at the arbitration hearing from Byrne and other supervisors indicated that they had no animosity toward him for his activities as a shop steward and editor of the local union’s newspaper and that Gordon had a “very high or good” reputation as a steward.

The Court is not required to decide whether Gordon read a piece of mail on duty and disclosed its contents in violation of postal regulations. The issue that must be resolved is the state of mind of Gordon’s supervisors at the time they fired him. There were two possible reasons for discharging Gordon, one permissible and one impermissible. The permissible reason was that he had violated postal regulations by reading a piece of mail on the job and disclosing its contents. The impermissible reason was that he had exercised his speech rights and in so doing had caused his supervisors to retaliate.

When Byrne drafted the letter discharging Gordon, he had only two pieces of direct evidence before him — the column containing the alleged admission and the subsequent statement contradicting it. While admissions are often treated as conclusive proof even, in the face of subsequent contradiction, what ordinarily lends credence to an admission is that the speaker believes his remarks will not come to the attention of the authorities. That factor is missing here because the column was published and circulated to union members and indirectly to Postal Service management. In addition, Gordon’s statement about the fabrication was not inherently incredible. It was consistent with his known flamboyance in writing style and personality. Moreover, Gordon was a long-time employee with several awards and commendations for unusual dedication to his job. He was respected in his duties as a union steward and he was entrusted by the Postal Service to the sensitive position of registry clerk, guarding and accounting for valuables sent through the mail.

Thus, when the two pieces of evidence before Byrne are juxtaposed with what was known at the time about Gordon’s character, the Court believes that a reasonable decision-maker would have found it impossible to come to a reasoned decision as to which version of events should be accepted.

To avoid basing a decision on the impermissible ground of punishing protected speech, a reasonable decision-maker was obligated at this point to investigate further to obtain sufficient evidence to support a finding that violation of postal regulations had occurred. Because Byrne did not do so but proceeded precipitously with the discharge, Byrne necessarily was substantially motivated by Gordon’s protected speech.

This improper motivation was not cured in the subsequent grievance process. While Gordon at one point declined to name the friend who had seen the Crane letter, he was never pressed on the point and he did produce the man at the arbitration hearing. The Postal Service did find that Gordon had worked third-class mail for a 45-minute period and a 90-minute period during the time that the Crane letter may have been processed by the Royal Oak post office, but these brief stints did not render it substantially more likely that he had seen the Crane letter on the job. The lack of evidence supporting the discharge on the permissible ground was still apparent: the arbitrator himself failed to decide whether Gordon had in fact violated the regulations.

Plaintiffs of course have the burden of proof of showing improper motivation for the discharge. There is no direct evidence of improper motivation, but that is often the case when one is attempting to show that a stated and permissible ground for a decision is pretextual, or at least that it was fatally mixed with an impermissible ground. In the absence of direct evidence, plaintiffs in such cases can meet their burden by circumstantial evidence. Clark v. Library of Congress, 750 F.2d 89, 101-02 (D.C.Cir.1984). Courts are required to consider the possible inferences from a set of facts and to draw those inferences that seem most reasonable. This is a close case. What tips the balance is the precipitous behavior of the Postal Service in a situation that called for a more measured and careful response.

Plaintiffs having met their burden, the Postal Service is entitled to show it would have reached the same decision in the absence of the protected speech. No such showing has been made here. As discussed above, the Court does not dispute the defendant’s contention that it could use the protected speech as evidence for unprotected dischargeable conduct. The dispute is with the defendant’s assertion that the sole motive for the discharge was Gordon’s unprotected conduct. Defendant’s Trial Brief at 14. The Court has already found against the Postal Service on this issue, even when the burden of proof was on the plaintiffs.

The Court believes reinstatement is the proper equitable relief to be granted in this case but that full back pay is not appropriate. While the Court earlier held that plaintiffs’ interest in free speech was strong enough in relation to the government’s interest in this case that discharge based on speech was not appropriate, 598 F.Supp. at 570-72, this did not preclude some lesser form of reasonable discipline. Gordon conceded by his retraction that his statement about the Crane letter was ill-advised. It created a clear implication that postal workers could disclose the contents of mail they had seen at work if it suited their personal advantage. Under these circumstances, an award of back pay would appear to create an inappropriate windfall for plaintiff.

Therefore, it is the Court’s view that Gordon should be reinstated to his prior rank but that the Postal Service is entitled to impose some appropriate penalty short of discharge consistent with the agency’s established procedures. The parties have already agreed to try to settle the appropriate amount of back pay. Because this entails consideration of technical contract provisions regarding back pay, seniority rights, pension benefits and other benefits, the Court believes that barring agreement by counsel settling the penalty and related adjustments, the appropriate forum for settling these details is not this Court but the established mechanism under the union’s contract with the Postal Service. Accordingly, the decision of the appropriate penalty to be imposed on Gordon in the light of this Memorandum, and the adjustments to his pay and benefits in accordance with that penalty, will be remanded for determination by the Postal Service.

Judgment shall be entered for plaintiffs. An appropriate Order is filed herewith.

ORDER

This matter having come before the Court for resolution on a stipulated record, and the Court having this day filed a Memorandum constituting its findings of fact and conclusions of law, it is hereby

ORDERED that judgment is entered for plaintiffs; and it is further

ORDERED that defendant United States Postal Service is directed within 30 days to reinstate plaintiff Gordon to his prior rank at the time of discharge; and it is further

ORDERED that absent agreement of counsel, the case is remanded to the Postal Service for further proceedings consistent with this Memorandum to determine the appropriate penalty short of discharge and to resolve issues of back pay and benefits consistent with such penalty by appropriate procedures.

      . The arbitrator did not reach the ultimate factual issue of whether the speech caused the discharge. Even if he had, this Court would not be bound by that determination in deciding plaintiffs’ constitutional claim. McDonald v. City of West Branch, — U.S. —, 104 S.Ct. 1799, 1804, 80 L.Ed.2d 302 (1984).

      . Arbitration Transcript at 147.

      . The statement is excerpted at 598 F.Supp. at 567.

      . Arbitration Transcript at 134.

      . Arbitration Transcript at 148.

      . Plaintiffs are incorrect in arguing that once they have shown that the protected speech was a "but-for cause" of the discharge, they have met their burden under Mt. Healthy and the burden shifts to the Postal Service to show it would have discharged Gordon even in the absence of the protected speech. What the plaintiffs must show before the burden shifts to the defendant is that a constitutional violation was a substantial cause of the discharge. Mt. Healthy, 429 U.S. at 286, 97 S.Ct. at 575; see also Clark v. Library of Congress, 750 F.2d 89, 101 (D.C.Cir. 1984). This inquiry in this case contains an important element of motive. It was perfectly permissible for the Postal Service to discharge Gordon and use the protected speech as a piece of evidence showing dischargeable conduct; what was not permitted was discharge based on speech as speech, that is, as an expression of ideas. The difference is thus between speech as evidence and speech as speech. A constitutional violation has been shown only when protected speech as speech is a substantial cause of the discharge. Only then does the burden shift to the employer to break the causal link by demonstrating that it would have reached the same decision in the absence of the protected conduct. The Supreme Court established this second element of the causation inquiry to avoid immunizing employees who engage in protected speech from having their fitness for the job assessed. Id., 429 U.S. at 286-87, 97 S.Ct. at 575-76.

      . In this regard, the Court believes that both plaintiffs and defendant have confused the two steps of the Mt. Healthy causation inquiry. The Postal Service seems to concede that the burden of proof is properly on it to show that its motive was to discharge Gordon for his conduct allegedly revealed by the protected speech. Defendant’s Trial Brief at 11, 13. For reasons stated above, the Court believes the burden is on plaintiff, because plaintiff must show that a constitutional violation has occurred before the burden shifts. The second stage of the causation inquiry in which the Postal Service does have the burden focuses on whether there were such weighty additional factors for the discharge besides the constitutional violation that the discharge would have occurred anyway. Here, there was a suspicion that dischargeable conduct had occurred. But because there was insufficient evidence to support a determination that the conduct had in fact occurred, the Postal Service has failed to show the discharge would have occurred anyway.