Brown & Williamson Tobacco Corp. v. Jacobson

POSNER, J.

This diversity suit brought by Brown & Williamson, the manufacturer of Viceroy cigarettes, charges CBS and Walter Jacobson with libel and other violations of Illinois law. Jacobson is a news commentator for WBBM-TV, a Chicago television station owned by CBS. The defendants moved to dismiss the complaint on a variety of grounds. Without writing an opinion the district court granted the motion "for the reasons set forth in defendants' memoranda," adding only: "to deny this motion would unduly restrict the freedom of the press and the right of a journalist to express opinions freely." Brown & Williamson appeals.

In 1975, Ted Bates, the advertising agency that had the Viceroy account, hired the Kennan market-research firm to help develop a new advertising strategy for Viceroy. Kennan submitted a report which stated that for "the young smoker," "a cigarette, and the whole smoking process, is part of the illicit pleasure category. . . . In the young smoker's mind a cigarette falls into the same category with wine, beer, shaving, wearing a bra (or purposely not wearing one), declaration of independence and striving for self-identity. For the young starter, a cigarette is associated with introduction to sex life, with courtship, with smoking 'pot ' and keeping late studying hours. . . ." The report recommended, therefore, the following pitches to "young smokers, starters": "Present the cigarette as part of the illicit pleasure category of products and activities. . . . To the best of your ability, (considering some legal constraints), relate the cigarette to 'pot ', wine, beer, sex, etc. Don't communicate health or health-related points." Ted Bates forwarded the report to Brown & Williamson. According to the allegations of the complaint, which on this appeal we must accept as true, Brown & Williamson rejected the "illicit pleasure strategy" proposed in the report, and fired Ted Bates primarily because of displeasure with the proposed strategy.

Years later the Federal Trade Commission conducted an investigation of cigarette advertising, and in May 1981 it published a report of its staff on the investigation. The FTC staff report discusses the Kennan report, correctly dates it to May 1975, and after quoting from it the passages we have quoted states that "B&W adopted many of the ideas contained in this report in the development of a Viceroy advertising campaign." In support of this assertion the staff report quotes an internal Brown & Williamson document on "Viceroy Strategy," dated 1976, which states, "The marketing efforts must cope with consumers' attitudes about smoking and health, either providing them a rationale for smoking a full flavor VICEROY or providing a means of repressing their concerns about smoking a full flavor VICEROY." The staff report then quotes a description of three advertising strategies. Although the description contains no reference to young smokers or to "starters," the staff report states: "B&W documents also show that it translated the advice [presumably from the Kennan report] on how to attract young 'starters' into an advertising campaign featuring young adults in situations that the vast majority of young people probably would experience and in situations demonstrating adherence to a 'free and easy, hedonistic lifestyle. '" The interior quotation is from another 1976 Brown & Williamson document on advertising strategy.

On November 4, 1981, a reporter for WBBM-TV called Brown & Williamson headquarters and was put in touch with a Mr. Humber in the corporate affairs department. The reporter told Mr. Humber that he was preparing a story on the tobacco industry for Walter Jacobson's "Perspective" program and asked him about the part of the FTC staff report that dealt with the Viceroy advertising strategy. Humber replied that Brown & Williamson had rejected the proposals in the Kennan report and had fired Ted Bates in part because of dissatisfaction with those proposals.

Walter Jacobson's "Perspective" on the tobacco industry was broadcast on November 11 and rebroadcast on November 12 and again on March 5, 1982. In the broadcast, Jacobson, after stating that "pushing cigarettes on television is prohibited," announces his theme: "Television is off limits to cigarettes and so the business, the killer business, has gone to the ad business in New York for help, to the slicksters on Madison Avenue with a billion dollars a year for bigger and better ways to sell cigarettes. Go for the youth of America, go get 'em guys. . . . Hook 'em while they are young, make 'em start now -- just think how many cigarettes they'll be smoking when they grow up." Various examples of how cigarette marketing attempts "to addict the children to poison" are given. The last and longest concerns Viceroy.

The cigarette business insists, in fact, it will swear up and down in public, it is not selling cigarettes to children, that if children are smoking, which they are, more than ever before, it's not the fault of the cigarette business. "Who knows whose fault it is?" says the cigarette business. That's what Viceroy is saying, "Who knows whose fault it is that children are smoking? It's not ours."

Well, there is a confidential report on cigarette advertising in the files of the Federal Government right now, a Viceroy advertising, the Viceroy strategy for attracting young people, starters they are called, to smoking -- "FOR THE YOUNG SMOKER . . . . A CIGARETTE FALLS INTO THE SAME CATEGORY WITH WINE, BEER, SHAVING OR WEARING A BRA. . . ." says the Viceroy strategy -- "A DECLARATION OF INDEPENDENCE AND STRIVING FOR SELF-IDENTITY." Therefore, an attempt should be made, says Viceroy, to ". . . PRESENT THE CIGARETTE AS AN INITIATION INTO THE ADULT WORLD," to ". . . PRESENT THE CIGARETTE AS AN ILLICIT PLEASURE . . . A BASIC SYMBOL OF THE GROWING-UP, MATURING PROCESS." An attempt should be made, says the Viceroy slicksters, "TO RELATE THE CIGARETTE TO 'POT ', WINE, BEER, SEX. DO NOT COMMUNICATE HEALTH OR HEALTH-RELATED POINTS." That's the strategy of the cigarette slicksters, the cigarette business which is insisting in public, "We are not selling cigarettes to children."

They're not slicksters, they're liars.

While Jacobson is speaking these lines the television screen is showing Viceroy ads published in print media in 1980. Each ad shows two packs of Viceroys alongside a golf club and ball.

Under contemporary as under traditional Illinois law, Jacobson's broadcast is libelous per se. Accusing a cigarette company of what many people consider the immoral strategy of enticing children to smoke -- enticing them by advertising that employs themes exploitive of adolescent vulnerability -- is likely to harm the company. It may make it harder for the company to fend off hostile government regulation and may invite rejection of the company's product by angry parents who smoke but may not want their children to do so. These harms cannot easily be measured, but so long as some harm is highly likely the difficulty of measurement is an additional reason, under the modern functional approach of the Illinois courts, for finding libel per se rather than insisting on proof of special damage.

But the defendants argue that Illinois has special and restrictive rules governing the defamation of a corporation. They cite a 1965 decision by this court which states that to allow a corporation to recover on a theory of libel per se under Illinois law "there must be a showing that it has been accused of fraud, mismanagement, or financial instability."

The defendants also argue and the district court also found that the libel was privileged as a fair and accurate summary of the Federal Trade Commission staff's report on cigarette advertising. The parties agree as they must that Illinois recognizes a privilege for fair and accurate summaries of, or reports on, government proceedings and investigations. They agree that the privilege extends to a public FTC staff report on an investigation. But they disagree over whether Jacobson's summary of the FTC staff report was "fair," that is, whether the overall impression created by the summary was no more defamatory than that created by the original. Since this is a question of fact, and the case was dismissed on the pleadings, all we need decide is whether the fairness of the Jacobson summary emerges so incontrovertibly from a comparison of the FTC staff report with the broadcast that no rational jury considering these documents with the aid of whatever additional evidence Brown & Williamson might introduce could consider the summary unfair.

Although the FTC report (and the Kennan report from which it quotes) refers to the targets of the Viceroy advertising campaign as "young smokers" and "starters," not as children, the broadcast implies that the campaign is aimed at children; for after quoting from the Kennan report as quoted by the FTC staff, Jacobson comments: "That's the strategy of the cigarette slicksters, the cigarette business which is insisting in public, 'We are not selling cigarettes to children. ' They're not slicksters, they're liars." Also, although the quotations in the broadcast are from the Kennan report rather than from any document written inside Brown & Williamson, and this is clearly indicated in the FTC staff report, the broadcast implies that they are quotations from Brown & Williamson. For example, Jacobson states that "an attempt should be made, says Viceroy" -- and there follow quotations from the Kennan report without identification of the true source. This is misleading. True, the FTC staff report does state that Brown & Williamson "adopted many of the ideas in" the Kennan report, and does not say which these were. But its quotations from Brown & Williamson's "Viceroy Strategy" paper imply that they were the ideas of repressing any concerns about the health hazards of smoking and of attracting young smokers by an advertising campaign associating smoking with a "free and easy, hedonistic lifestyle"; there is no suggestion that Brown & Williamson adopted Kennan's specific proposal, quoted by Jacobson, "to relate the cigarette to 'pot ', wine, beer, sex," or to "wearing a bra." Jacobson also deleted the qualification, "considering some legal constraints," and omitted mention of the fact that the Kennan report had been written six years before and that the advertising campaign which the FTC staff thought based in part on that report had been conducted five years before. The omission was misleading because the juxtaposition of the audio portion of the broadcast with current Viceroy advertising implied that Viceroy was continuing to employ the disreputable methods recommended by the Kennan report (though the connection between golf and a strategy of enticing children is obscure).

The fact that there are discrepancies between a libel and the government report on which it is based need not defeat the privilege of fair summary. Unless the report is published verbatim it is bound to convey a somewhat different impression from the original, no matter how carefully the publisher attempts to summarize or paraphrase or excerpt it fairly and accurately. An unfair summary in the present context is one that amplifies the libelous effect that publication of the government report verbatim would have on a reader who read it carefully -- that carries a "greater sting." The FTC staff report conveys the following message: six years ago a market-research firm submitted to Brown & Williamson a set of rather lurid proposals for enticing young people to smoke cigarettes and Brown & Williamson adopted many of its ideas (though not necessarily the specific proposals quoted in the report) in an advertising campaign aimed at young smokers which it conducted the following year. The Jacobson broadcast conveys the following message: Brown & Williamson currently is advertising cigarettes in a manner designed to entice children to smoke by associating smoking with drinking, sex, marijuana, and other illicit pleasures of youth. So at least a rational jury might interpret the source and the summary, and if it did it would be entitled to conclude that the summary carried a greater sting and was therefore unfair.

The judgment dismissing Count I of the complaint (defamation) is reversed and the case is remanded for further proceedings consistent with this opinion.