*1 COMPANY, LIFE INSURANCE SIERRA Corporation,
an Idaho
Plaintiff-Respondent, NEWSPAPERS, INC., VALLEY
MAGIC Times-News,
publisher of Twin Falls Howard,
William E. Richard G. Lazarus, Defendants-Ap-
and William
pellants.
No. 12950.
Supreme of Idaho.
Sept. 1980. Denied Feb.
Rehearing
company headquarters Falls, in Twin Idaho. In September, following the revela- tion that the state of had Nevada canceled Sierra’s license to sell insurance in that state, newspaper began series of “in- vestigative reports” on Sierra. news- paper publish continued to articles about months, eight Sierra over the next includ- ing reports on the activities of insurance Montana, Idaho, Wyoming, commissions in Nevada, Mexico, Utah and New which at various placed times restrictions on Sierra’s ability to respective conduct business in the Reporters states. newspaper for the in ad- dition traveled to states in which Sierra located, assets were through their sto- Lloyd Webb, Burton, J. Webb Carlson, ries cast some doubt on claimed Sierra’s Paine, Falls, Pedersen & Twin Harold B. values and classifications. Gabel, Wahl Jacksonville, Fla., of Wahl & early complaint Sierra filed its for defendants-appellants. trial, jury demand for a alleging that Imhoff, Davis, Lynch Boise, & A. Bob the articles published by newspaper Jordan, Okl., City, plaintiff- Oklahoma falsely and maliciously depicted fi- respondent. nancial condition. The complaint contained libel, five counts: injurious falsehood and BISTLINE, Justice. defamation, tortious interference with con- Magic Inc., Valley Newspapers, William relations, tract negligence, and one other Howard, High Richard and William Lazarus later dismissed. In May of 1976 Sierra (hereinafter referred to collectively as the amended its complaint to include additional 1), “newspaper” appeal a monetary judg allegedly libelous printed articles since the against entered them for libel. As a filing. initial Sierra then served result of the defendants’ refusal to obey its newspaper request production of docu- order, the trial court struck all ments, including request for a telephone defendants’ pleadings, thus placing them in log of the any persons names of with whom default. The discovery order required them newspaper concerning had conversed to identify confidential sources consulted in Sierra, the affairs notes as to process preparing alleged by articles any personal conversations. the plaintiff-respondent Sierra Life Insur The newspaper filed May its answer on (hereinafter ance “Sierra”) Go. to be libe 28, 1976, claiming the truth of the articles lous. published responding request with the tender of a “Limited Re- L sponse Request for Production of Docu- was, Sierra litigation time this ments,” in which the newspaper stated that commenced, an corporation Idaho selling in- have, it did produce but would not “[confi- surance in Idaho and several surrounding dential, off-record, notes from informants states. In September of em- given to the Defendants.” then de- ployed agents insurance, selling with Lazarus, posed High Richard and William Magic Valley’s arguments appeal reporters One of fact, acts of and Lazarus-in newspaper should not be held liable for the several editorials declared its defendants, allegedly beyond support policy failure of control, continued of nondisclo- sure of sources-we with treat the court-ordered defendants in this single entity. covery. case as a Since there was no real effort made from the to disassociate itself under advisement. the matter taken con- to reveal sources both 4, 1977, this Court articles. on March [Meanwhile, preparation sulted in the v. Tribune in Caldero opinion he used no “sources” announced Lazarus testified 288, 562 P.2d 98 Idaho Publishing Company, in his articles. 1, 1977, this Court’s (1977).] April inter- a series of served entered, dismiss- opinion, without order was Sierra, attempting to deter- rogatories upon *3 the writ application for ing to be alleged mine what in the articles was prohibition. compel false. then filed a motion to At the hear- High newspa- Lazarus and to answer. moved to strike the then ing newspaper default, motion the contended this its and enter based per’s pleadings byit its confi- 37(b) that the statements made to Rule provisions on the sanctions used, either direct- dential sources were not Procedure. the Idaho Rules of Civil published, or ly indirectly, stories argument oral on the motion After merely sources had and contended strike, ruled that sanctions the trial court the existence of suggested newspaper to the gave newspa- but appropriate, would be officials, might which or public documents his comply with in which to per thirty days useful information. provide doing, In so September order of that it would stating The trial court in the trial court stated: answers, ana- compel grant motion clear, “Well, thing to be that one sure lyzed thusly: the situation in mind that question my there is no reporter seems to me when a be- for, “[I]t you applied writ that quashing of the an party, party comes a a defendant to original proceedings on a writ from the privilege. action then he doesn’t have that court, the from this Supreme Court He longer reporter. party He no is a is a quashing of the writ was a result of to an action. And I don’t believe that Caldero, my And for decision Caldero. any other defendant can stand up say absolutely privi- there is no money says going you. I am not to tell I don’t think reporter of a under the First Amend- lege by this can be exerted privilege Constitution; privi- that that ment of the this of an reporter type who is lege goes press to the as a whole to be imperative action. I think that it censorship and free from sub- free from given opportunity this reporter not to an individual version and discovery.” decision, who, privilege has no under that to refuse to answer. Septem- The trial court order entered on 16, 1976, ber provided that: “Now, that the dissent- acknowledge I as did the ing opinion in that Defendants and each of them in this “[t]he senting opinions many of these Federal case may not avail themselves of .cases, something think some try to protections them afforded to and all of that about reasonableness First Amendment to the Constitution and [sic] in; majority but the something to work . hereby ordered to answer no opinion says flat-footedly there is every interrogatory each and or privilege. position And this is the that I propounded to them relating to take.” source of the sought by information or
supplied by any to them informants and applied The then to this Court newspaper divulge proper interrogatory under review, requesting this for a writ of Count nature question and substance of an- compelling to review the two orders information.” request. Pend- swers Court, December, 1976, Ward ing ruling by Judge this newspaper filed in compliance with his extended the time for original seeking this an action a writ Court 20 de- July July 1977. On prohibition preclude the trial court order until Valley and Howard re- enforcing Magic from order. On De- fendants heard, they willing cember 10 oral were sponded that .798 High Lazarus order, sanctions
with the
but were unable
so,
martyrs
merely
do
since
did not themselves know
make them
they
sources,
were no
The
hereinafter
High
and Lazarus
unbelievers.
sanctions
defend-
beyond
them and thus
to all named
longer employed by
apply
delineated will
Defendants
and Laza-
control.
ants.”
separately
responded
rus at the same time
with the trial
then filed
newspaper
con-
to refuse to reveal
continued
disposition
a motion to reconsider
22, 1977,
July
fidential
this
sources.
motion
of defendants’
denied the
opinion
order without
ment,
in its memorandum
pointing out
application for a writ of review.
court did not deal
decision the trial
filed a
then
motion
The fol-
of truth.
defense
the defendants’
In the
supporting
argument oral
lowing
place
took
brief the
set forth a table of
motion:
allegedly
each of the claims of
libelous
(Mr. Webb)
*4
statements,
from
pieced together
as
Sierra’s
we have established
believe that
“[W]e
together
answers to
with a
interrogatories,
therefore,
and,
be enti-
the truth
series of exhibits of affidavits and other
on
is-
summary judgment
tled to a
documentary
upon
data
which its claims of
course,
that,
would be unre-
sue. And
justification
truth or other
of the state-
and the
of malice
lated both to the issue
ments were based.
sources in
the unnamed
corollary issue of
oppo-
with affidavits in
responded
Sierra
or false. The
are true
that either
summary judgment.
sition to the motion for
show
the court
documents we have before
A
held on the motion for sum-
hearing was
true;
those
statements
30, 1977. The
judgment
August
on
mary
identity
tipsters
therefore
following
the trial court issued memo-
day
ver-
by
Hemingway
moot as indicated
granting
plaintiff’s
randum of decision
in
is the
sus Fritz case. And that
essence
of the news-
pleadings
motion to strike the
that,
Judge.
on
grant
the motion of
paper,
Well,
term
“THE
I think the
COURT:
malice includes the lack of
constitutional
“[mjany
The
noted that whereas
court
to,
It has
but that
truth in a libel action.
involve mere se-
plaintiff’s complaints
then-Mr. Imhoff.”
urges one word
plaintiff
mantics where
Sierra,
Imhoff,
thereup-
attorney
Mr.
should have been used for
one as
another
contended,
among
things,
on
nevertheless,
defendants,”
by
used
in
of fact still
there were several issues
“[djefendants’ motion for
However,
never ruled
the court
dispute.
plaintiff
until the
granted
cannot be
defense of
newspaper’s
specifically
has had full
discovery.”
truth,
deny the motion to amend
except to
Judge
opinion,
necessary
Ward’s
was
memorandum of decision.
to show
give
plaintiff
opportunity
newspaper’s
constitutional malice. The
mo-
for sanctions
motion
granting
Sierra’s
defendants,
tion for
was continued
summary
all
entering the default of
until
had had ade-
such time as
the default
ruled that since
the trial court
quate discovery. Plaintiff’s motion
well-pled elements of
all
admitted
entry
judg-
sanctions and the
of a default
would not be
complaint, Sierra
plaintiff’s
Ward, the
Judge
malice,
ment was granted by
either
prove
falsity,
required
newspaper having
comply
failed to
with the
remaining issue for
sole
causation.
Judge
damages
court’s order.
Ward stated:
suffered
the amount
trial was
the court ruled
Sierra,
which issue
the law in Idaho
“[Djespite the fact that
Trial on
be heard.
Caldero,
could
there
that defendants
clearly
established
was
issue,
postponements,
after several
are still
few who believe
misguided
those
25, 1978.
January
impose
the law
otherwise. To
had
should be
Participations
Pour
trial,
Internationale
damage
At
Life’s
evidence
Societe
Sierra
Commerciales,
Rog-
A. v.
et
S.
Industrielles
force
agency
centered on the loss of its sales
1087, 1094,
ers,
357 U.S.
S.Ct.
called
profits.
and the loss of future
(1958):
L.Ed.2d
expert
specialists
as
insurance
witnesses
and Hammond
[Hovey
“These decisions
acquiring
who
on the cost of
testified
are consti-
that there
Packing] establish
staff,
training
profits.
a sales
and on lost
power
limitations
tutional
4,1978, the trial
entered a
April
valid
courts,
own
even in aid of their
decision,”
judg-
granting
“memorandum
without
to dismiss an action
processes,
ment in favor of
the amount of
for a
affording
opportunity
$1,942,680.
arrived at
This amount was
his cause. The
hearing on the merits of
training
the cost of
a sales
multiplying
aware of
Rule 37 were well
authors of
agent
($72,164) by the number of sales
considerations.”
these constitutional
(12) at the time the
agents on
staff
asserts
In the
case Sierra
newspaper began publishing its
stories
continued refusal
($865,968), plus
proportion
prof-
of lost
proving
it from
discovery prevented
its attributable to the loss of those twelve
malice,
required
an essential
constitutional
agents ($1,076,712).
York Times Co. v. Sulli-
element under New
van,
11 L.Ed.2d
376 U.S.
S.Ct.
II.
propriety
Our first concern is the
that there
Assuming, arguendo,
the trial court’s decision
striking
plead
*5
discovery re
legitimate
a
basis for Sierra’s
ings of the
a sanction for
newspaper as
whether the
determine
quest, we must still
refusal
comply
to
with court-ordered dis
imposed
and then
sanctions
threatened
covery.
In approaching
we
to
justified,
in order to allow Sierra
were
are equally
ought
mindful that a defendant
case-or,
by the
as contended
its
profit
not
from his own refusal
to make
harsh and in the
newspaper,
overly
were
discovery, but such recalcitrance should not
If, as in the Ham
punishment.
nature of
away
take
those
which are not
defenses
case,
the
we assume that
Packing
mond
affected
his refusal to disclose.
to have
produce
refusal to
evidence claimed
Supreme
Court of the United States
on the issue of malice is an “ad
relevance
long ago
imposition
ruled that
the
of a
asserted
mission of the want of merit in the
default
judgment
for failure to
an
obey
defense,”
inquire whether
still we must
produce
order to
evidence could constitute a
de
the
impede
refusal should
Elliott,
denial of due process. Hovey v.
167
lack of causal relation
fenses of truth and
409,
841,
(1897).
U.S.
17
42
S.Ct.
L.Ed. 215
published by
the statements
ship between
In
Arkansas,
Hammond Packing Co. v.
212
damages suffered.
the
the
and
370,
(1909),
U.S.
S.Ct.
“From a
that,
testimony
directing
well
if his
presumed
be
order
here was in the trial court’s
the cause of
given,
were
it would sustain
to reveal their confidential
the defendants
adversary, and we
action or defense of his
sources,
ruling at that
and that a correct
the law
presumption
think that
this is a
placing the
point would have avoided
right
indulge.
and the courts have a
which resulted in
ensuing
situation
refusal of a
principle,
On the same
Thus the hold-
sanctions.
imposition
interrogatories may
be
answer
application
its
ing in
Caldero
implied
treated as' an
admission of the
The debate
is of concern.
facts of this case
discovery
facts in relation to which a
is
apparently
was
validity
over the
of Caldero
But,
there are numerous is-
sought.
if
Supreme
States
put
to rest
the United
sought
discovery
sues in a
Lando, 441
in Herbert v.
U.S.
issues,
striking
these
only as to one of
There
60 L.Ed.2d
S.Ct.
taking
judg-
of the answer and the
through
to obtain
attempted
plaintiff
libel
issues,
all
for failure to make
on
information concern-
discovery process
one,
justified
as to
can
story
about him
manner in which
ing the
theory
given
on the
that the
The defendant resisted
prepared.
had been
punishment
as a
for the failure
make
of an asserted
grounds
may
and it
well be
discovery,
doubted
The court denied that
privilege.”
“editorial
whether
proceeding
such a
can be sus-
could be
assert-
privilege
successfully
such a
tained under the authorities above cited.”
1121, quoted
Id. at
seeking legitimate
expected to exercise caution when it orders Tern., concur. these sources to be revealed. As the Su preme Court of the United sug States has BAKES, Justice, concurring specially: gested, the first to be answered is I write the last issue emphasize whether identity of the sources is rele treated the Court relating to the trial Caldero, vant. In very crux of the case tabling court’s the newspaper’s motion for “police whether or not expert” Hemingway existed, actually and whether or not he said Fritz, (1974), P.2d 264 Idaho we which the published. Rele held that a libel defendant’s refusal to re- vance was there beyond quibble. established spond preclude would not Here, however, the existence of “confi- issuance of a motion for dential sources” was never declared in ment in favor of the if the record defendant articles, nor is it shown that on motion for disclosed summary *7 gained information therefrom was used di- alleged that all libelous statements stories; rectly any of the appears that were true. out in its points As sources served to make the news- opinion, ante at point- “Sierra has not paper aware of where information was ed out how revelation of sources would available. have been instrumental in establishing that Therefore,
On remand the should district court re- the articles were in fact false.” remand, consider motion to compel discovery if support the record in in light of the views herein expressed summary judgment defendants’ motion for authority evidence and which the alleged establishes the truthfulness of the parties may present. If statements, motion is libelous and the defendants refused, granted, and the dis- unable to demonstrate “how revelation of trict may then take anew sources have been instrumental [the] sanctions, requested matter of also to be in establishing that the articles were in fact done in light false,” of the views herein expressed summary judgment should be en- Heming- in favor
tered of the defendants. Fritz,
way supra. Idaho, Plaintiff-Respondent,
STATE GOMEZ, Defendant-Appellant.
Carlos 12820.
No.
Supreme Court of Idaho. 9, 1980.
Dec.
Rehearing Denied Feb.