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In a victory for The New York Times, a federal judge has refused to grant a new trial in a “defamation by implication” libel suit brought by a Philadelphia pharmacy that accused the newspaper of harming its reputation by using an image on its Internet Web site to illustrate an article about illicit online drug sales. In the suit, Franklin Prescriptions Inc. claimed that the use of its Internet site as a graphic to illustrate an article headlined “A Web Bazaar Turns Into a Pharmaceutical Free for All” implied that it, too, was guilty of illicit conduct — even though Franklin was never mentioned in the text of the article. After a weeklong trial in March, a jury answered six questions and sided with Franklin on the first five. Among its findings were that the article “contained a defamatory implication” about Franklin and that the Times had “acted intentionally, reckless or negligently.” But the answer to the sixth question handed victory to the Times and ended the case when the jury concluded that Franklin had not suffered any “actual harm that was substantially caused by the article.” In the trial, the newspaper’s lawyers — Elizabeth K. Ainslie, Carl A. Solano, Jennifer DuFault James and Harris Neal Feldman of Schnader Harrison Segal & Lewis — presented evidence that Franklin’s sales had actually increased in each of the months and years since the article’s publication. But the plaintiff’s lawyers argued that Franklin’s reputation had nonetheless been harmed, citing evidence that the number of visitors to its Web site had dropped, that it had suffered a decrease in customers outside of the Delaware Valley Region, and that it had suffered a decrease in overnight shipping. In a motion for a new trial, plaintiff’s attorneys George Bochetto and David P. Heim of Bochetto & Lentz argued that the verdict was “the result of juror confusion stemming from incomplete and inaccurate jury instructions as to the types of damages to which Franklin was entitled.” The motion said U.S. District Judge Cynthia M. Rufe erred by failing to instruct the jury charge on the concepts of “presumed damages” and “defamation per se” — issues which the plaintiff’s lawyers said were “crucial” to its case. Now, in a 21-page opinion in Franklin Prescriptions Inc. v. New York Times Co., Rufe has denied the motion, finding that her jury instructions were proper under Pennsylvania law. Rufe flatly rejected the plaintiff’s argument that her instructions misled the jury by failing to specify that Franklin was not required to prove financial damages. Instead, Rufe concluded that the jury’s verdict in favor of the Times stemmed from the plaintiff’s failure to present any evidence on that issue. “Plaintiff simply did not present any evidence that would allow a jury to conclude that it was harmed,” Rufe wrote. “Plaintiff did not present the testimony of one doctor or potential customer who had even read the article, let alone read it and formed a negative opinion of Franklin as a result.” The evidence presented by the defense, Rufe said, showed that in the months after the article was published, Franklin’s sales had “increased at a rate comparable to the sales increases prior to the publication of the article.” As a result, Rufe concluded that the jury’s verdict was sound. “This court fails to see how any reasonable jury could find that an article that was not read by any potential customers caused any harm, reputational or otherwise, to a company whose revenues increased in the months and years following the publication of the article,” Rufe wrote. “Thus, the reason the jury did not find any reputational harm was not because it was misled by the court’s damage instruction, but because [the] plaintiff did not present any evidence of reputational harm,” Rufe wrote. Rufe also rejected the argument that she had erred by failing to instruct the jury on the issue of “presumed damages,” finding that the plaintiff had failed to preserve its objection on that point and that it was not entitled to such an instruction even if it had preserved the objection. “By failing to object at any point on (or off) the record to the absence of a presumed damages instruction, [the] plaintiff has waived this issue,” Rufe wrote. Rufe noted that when she gave the lawyers a draft copy of her jury instructions, the plaintiff’s lawyers “made three specific objections,” including an objection to the absence of a defamation per se instruction, but they “never mentioned the absence of a presumed damages instruction.” The plaintiff’s lawyers had two more opportunities to lodge objections, Rufe said, immediately prior to their closing speeches and immediately after the instructions were read to the jury, and “again [the] plaintiff chose not to object.” Bochetto argued he did not raise such an objection on the record because “the court made it abundantly clear that it did not wish to rehash issues that had already been raised.” Rufe rejected that logic, saying it was “inconsistent with the fact that the plaintiff specifically sought to preserve on the record its objection relating to defamation perse.” Despite finding that the objection was waived, Rufe went on to address the merits of the plaintiff’s argument, noting that a new trial would be warranted if her failure to give such an instruction amounted to “plain error.” Because the Supreme Court of Pennsylvania has never specifically addressed whether presumed damages are available under Pennsylvania law, Rufe found that her task was to predict how the state Supreme Court would rule. Bochetto argued that Section 13.10B of the Pennsylvania Suggested Standard Civil Jury Instructions should be given in every defamation case. Section 13.10B reads, in part: “If you find that the defendant acted either intentionally or recklessly in publishing the false and defamatory communication, you may presume that the plaintiff suffered both injury to [his] [her] reputation and the emotional distress, mental anguish, and humiliation that would result from such a communication. This means you need not have proof that the plaintiff suffered emotional distress, mental anguish, and humiliation in order to award [him] [her] damages for such harm because such harm is presumed by the law when a defendant publishes a false and defamatory communication with the knowledge that it is false or in reckless disregard of whether it is true or false.” In his brief, Bochetto quoted a subcommittee note that calls for such an instruction. But Rufe found that the subcommittee note “appears to be at odds with the Pennsylvania Superior Court’s 1993 decision in Walker v. Grand Central Sanitation Inc.“ In Walker, Rufe said, the Superior Court held that “a defendant who publishes a statement which can be considered slander per se is liable for the proven, actual harm the publication causes.” Although the Pennsylvania Supreme Court denied allocatur in Walker, Rufe found that “numerous cases have cited Walker as authority for the position that defamation plaintiffs must prove actual harm.” Rufe concluded that the Walker court “correctly predicted that the Supreme Court of Pennsylvania would adopt the Restatement’s position that defamation plaintiffs must prove actual harm.” She also found that a Section 13.10(B) instruction would have been “particularly inapplicable in this case” because Franklin “is a corporation and thus cannot suffer emotional distress, mental anguish or humiliation.” Finally, Rufe concluded that the evidence at trial fell short of what is required for a presumed damages instruction. “Even if presumed damages were available under Pennsylvania law, they would not be available to plaintiff here because the evidence presented at trial fell well short of that necessary for a showing of actual malice or reckless disregard for the falsity as is constitutionally required for the recovery of presumed damages,” Rufe wrote. Bochetto said he had not yet reviewed Rufe’s decision, but he intends to file an appeal.

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