A recent appellate division decision rejected a libel suit by a retail business against a newspaper on the grounds of the common law public interest privilege Finch and Countryside Oil Corp v. The New Jersey Herald, et al., (No A-569-99, App. Div. Nov. 20, 2000). The plaintiffs were Countryside Oil Corp., a retail fuel oil dealer, and its principal owner. The defendants were a daily newspaper in rural Sussex County, New Jersey, a reporter and several editors. The plaintiff company for several years had ongoing federal tax problems which had not been previously reported. A Notice of Public Sale by the IRS was then published as to a parcel of real estate owned by the plaintiff oil dealer.

The newspaper wrote an article about the pending sale, but the article stated in effect that the whole company would be sold, not just a piece of real estate. The article appeared the day of the sale, in November 1997, early in the winter heating season. According to the plaintiffs, their customers erroneously believed the company was going out of business. The cash customers stopped ordering and the prepaid customers, under advance payment plans, all demanded at once to have their tanks filled.

The reporter had spoken to the IRS representative, and looked up federal tax liens in the local filing office. She had left messages for the principal of the oil company at his office, but these were not returned.

The sale was postponed for six weeks, and a follow-up story a week after the original story perpetuated the error. Plaintiffs still had not called the newspaper back. The follow-up article referred to some of the frantic efforts by customers to get oil they had already paid for.

The plaintiffs sought a retraction. The newspaper printed a correction a week later acknowledging it had referred to sale of the business when only a real estate parcel was involved. It also referred to the oil company's problems with its customers.

The oil company and principal sued the newspaper, reporter and editor. Also named were several competing fuel oil dealers which allegedly falsely claimed the plaintiff oil company was out of business; these claims were settled or dismissed.

The newspaper defendants moved for summary judgment on the basis of the New Jersey common law public interest privilege. First announced in 1986 by the New Jersey Supreme Court, it protected statements by a newspaper about a sale of bottled water on the basis that bottled water implicated public health concerns, which affected the public interest. Dairy Stores, Inc. v Sentinel Publishing Co., 516 A. 2d 220 (1986). In a separate case, the privilege was applied to an article about a bank and a loan to its former president on the basis that banking was highly regulated, and therefore affected the public interest. Sisler v. Gannet Co., Inc., 516 A. 2d 1083 (1986).

In 1995, the New Jersey Supreme Court rejected a lower court ruling that any retail business doing business with the general public affected the public interest. Turf Lawnmower Repair v. Bergen Record Corp., 655 A. 2d 417 (1995), cert. den. 516 U.S. 1066 (1996). The Supreme Court ruled for the newspaper, because the activities of the business, if true as alleged, violated the Consumer Fraud Act, which in turn involved the public interest.

In the current case, the newspaper defendant argued that the tax problems of a retail business, first publicized in a legal advertisement, raised a public interest question as to the business's ability to serve its customers. Also, home heating oil was an essential element, as a source of heat for shelter, and the financial problems of a vendor of heating oil involved the public interest.

The plaintiffs objected that reference in the motion to the prepaid oil plan and its problems were irrelevant, since it was not discussed in the two articles under suit. Plaintiffs argued that the hardships to customers unable to get oil that they had paid for was the result of the false newspaper article drying up the company's cash flow.

After extensive argument, the trial judge granted summary judgment to the newspaper defendants. He found that the financial problem of the business, requested by a published legal advertisement and filed federal tax liens was a subject of public interest. He also held that the nature of the business, sale of home heating oil to residential customers, many of limited means and elderly, also involved the public interest.

The case was appealed to the Appellate Division; the arguments below were repeated to the appellate court. In November 2000, in a ten page, unpublished opinion, the court affirmed the rulings below. There never was a serious issue before either court as to whether the reporter acted with actual malice or reckless disregard of the truth, which if proven would have overcome the privilege.

The deposition of the reporter made clear that she misunderstood the nature of the sale despite speaking with a representative of the IRS. She had reached out to the oil company for comment but the calls where never returned. She had never heard of the oil company before this article. She was assigned the article because she covered the courthouse "beat," but had little experience with lien filings and tax sales.

Although the New Jersey Supreme Court has rejected a blanket public interest privilege for articles about retail businesses, the lower courts will extend the limited privilege where a proper case has been made. New Jersey Courts are still encouraged to grant summary judgement in defamation cases.

Peter G. Banta is the author of the New Jersey Chapter of LDRC's 50 State Survey of Libel Law and is a senior partner of the Hackensack, New Jersey law firm of Winne, Banta, Rizzi, Hetherington & Basralian, P.C. Mr. Banta was attorney for the newspaper defendants in the New Jersey Herald litigation discussed above. He was also counsel for the Bergen Record newspaper defendants in the 1995 New Jersey Supreme Court Turf Lawnmower decision discussed in the article.