2005 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-12-2005

Franklin Pre v. NY Times Co

Precedential or Non-Precedential: Precedential

Docket No. 04-3404

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"Franklin Pre v. NY Times Co" (2005). 2005 Decisions. Paper 481.

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 04-3404

FRANKLIN PRESCRIPTIONS, INC.,

t/a Franklin Drug Center

v.

NEW YORK TIMES CO.,

SANDRA COBURN, JOHN DOE, JANE DOE

Franklin Prescriptions, Inc., 

 Appellant

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

D.C. Civil Action No. 01-cv-00145

(Honorable Cynthia M. Rufe)

Argued May 27, 2005
2

Before: SCIRICA, Chief Judge,

ALITO and GARTH, Circuit Judges

(Filed September 12, 2005)

GEORGE A. BOCHETTO, ESQUIRE (ARGUED)

DAVID P. HEIM, ESQUIRE

Bochetto & Lentz, P.C.

1524 Locust Street

Philadelphia, Pennsylvania 19102

Attorneys for Appellant

CARL A. SOLANO, ESQUIRE (ARGUED)

Schnader Harrison Segal & Lewis LLP

1600 Market Street, Suite 3600

Philadelphia, Pennsylvania 19103

Attorney for Appellees

OPINION OF THE COURT

SCIRICA, Chief Judge.

Plaintiff/Appellant Franklin Prescriptions challenges the

jury instructions in this defamation action under Pennsylvania

law. At issue is whether plaintiff properly objected to the

court’s jury charge under Federal Rule of Civil Procedure 51,
3

and whether plaintiff was entitled to an instruction on presumed

damages and defamation per se. The District Court denied

Franklin Prescriptions’ motion for a new trial. We will affirm.

I.

Franklin Prescriptions, Inc., is a small pharmacy in

Philadelphia specializing in fertility medications. In 1996, the

company began marketing its niche products on the internet via

an information-only website. The website allows Franklin

Prescriptions’ customers to survey available products and

pricing, but does not enable the online purchase of prescription

drugs. Franklin Prescriptions only accepts drug orders by way

of mail, telephone, fax, or in person, and only then with a

doctor’s prescription.

On October 25, 2000, the New York Times published an

article entitled, “A Web Bazaar Turns into a Pharmaceutical

Free For All.” The article addressed the risks of purchasing

fertility drugs on the internet. It described “unscrupulous” and

“cloak and dagger” websites that process online orders for

controlled drugs without prescriptions. Franklin Prescriptions

was not mentioned in the text, but the article contained a graphic

insert with an image of the Franklin Prescriptions website that

identified Franklin Prescriptions by name. The insert was

placed next to a side-bar labeled “Safety Tips for Buying EMedicines” that warned readers to “[a]void sites that fail or

refuse to provide a United States address and phone number.”

Although Franklin Prescriptions’ website did, in fact, list the
4

company’s address and telephone number, the partial image

reproduced for the article omitted this information.

Significantly, the published image also omitted part of the

website that stated in bold-face language: “Must have doctor’s

prescription from a physician licensed in the United States to

purchase Viagra.”

Franklin Prescriptions sued for defamation. The District

Court denied the New York Times’ motion for summary

judgment, finding a genuine issue of material fact on whether

the newspaper published the article with reckless disregard for

its falsity. The case went to trial, and the jury found the article

false and defamatory. But it awarded no damages, finding

Franklin Prescriptions suffered no actual harm caused by the

publication.

Before the jury was charged, Franklin Prescriptions

submitted proposed jury instructions on presumed damages and

defamation per se. Neither proposed instruction was given to

the jury. The parties dispute whether Franklin Prescriptions

objected to the lack of a presumed damages instruction.

Franklin Prescriptions submits that it did so—off the record—at

an in camera charging conference held in chambers. The New

York Times disputes this contention, maintaining that the

presumed damages instruction was not discussed at the

chambers charging conference. In its Memorandum Opinion

and Order, the District Court rejected Franklin Prescriptions’

assertion, stating that “the Court terminated the conference

before addressing Plaintiff’s presumed damages instruction.”
5

Franklin Prescriptions, Inc. v. The New York Times Co., 2004

WL 1770296, at *5 (E.D. Pa. Aug. 5, 2004). Whether or not an

objection was raised at the charging conference, it is undisputed

that Franklin Prescriptions never entered an on-the-record

objection to the lack of a presumed damages instruction.

In denying the motion for a new trial, the District Court

held that Franklin Prescriptions failed to object to the lack of a

presumed damages instruction under Fed. R. Civ. P. 51(c)(1),

which provides that a party objecting to jury instructions “must

do so on the record.” Additionally, the District Court held that

under Pennsylvania law Franklin Prescriptions was not entitled

to a jury instruction on presumed damages. Franklin

Prescriptions, 2004 WL 1770296, at *7-8.

II.

The District Court had diversity jurisdiction under 28

U.S.C. § 1332. We have appellate jurisdiction under 28 U.S.C.

§ 1291. Our standard of review turns on whether Franklin

Prescriptions properly objected to the relevant jury charge.

Where a party properly objects to a jury instruction under Fed.

R. Civ. P. 51, we exercise plenary review to determine whether

the instruction misstated the applicable law. Cooper Distrib.

Co., Inc. v. Amana Refrigeration, Inc., 180 F.3d 542, 549 (3d

Cir. 1999) (citing Walden v. Georgia-Pac. Corp., 126 F.3d 506,

513 (3d Cir. 1997)). Where a party fails to object properly, we

may review for “plain error in the instructions affecting

substantial rights.” Fed. R. Civ. P. 51(d)(2). Under the
6

discretionary plain error standard, we will reverse the trial court

only where a plain error was “fundamental and highly

prejudicial, such that the instructions failed to provide the jury

with adequate guidance and our refusal to consider the issue

would result in a miscarriage of justice.” Ryder v. Westinghouse

Elec. Corp., 128 F.3d 128, 136 (3d Cir. 1997).

III.

A.

The District Court held that Franklin Prescriptions failed

to preserve its presumed damages objection under Federal Rule

of Civil Procedure 51(c)(1), which provides that a party

objecting “to an instruction or the failure to give an instruction

must do so on the record, stating distinctly the matter objected

to and the grounds of the objection.” Notwithstanding the plain

language of Rule 51, Franklin Prescriptions contends it

preserved its objection by submitting a formal request for a

presumed damages charge and by pressing for that instruction

during the in camera charging conference.

Merely proposing a jury instruction that differs from the

charge given is insufficient to preserve an objection. Abuan v.

Level 3 Communications, Inc., 353 F.3d 1158, 1172 (10th Cir.

2003); Caruso v. Forslund, 47 F.3d 27, 31 (2d Cir. 1995);

Advisory Committee Note to Fed. R. Civ. P. 51 (“Many cases

hold that a proper request for a jury instruction is not alone

enough to preserve the right to appeal failure to give the

instruction.”). As the Advisory Committee Note to Rule 51
7

explains, challenges to the failure to give a proposed jury

instruction “must be renewed by objection.”

Nor does Franklin Prescriptions’ purported charging

conference objection preserve the issue. Franklin Prescriptions

cites to Smith v. Borough of Wilkinsburg, 147 F.3d 272, 277-78

(3d Cir. 1998), where a party submitted a proposed jury

instruction and later objected to its omission at an in camera

charging conference. We found the objection preserved under

Rule 51 because “the district court was fully apprised of [the

party’s] position, and it would serve no purpose to require

counsel to have formally reasserted the objection after the

charge had been given to the jury.” Id. at 278.

But Smith is unavailing here. The premise of Smith was

that the trial court was “fully apprised” of the party’s objection

and nevertheless rejected it. Both the parties and the District

Court in Smith agreed there had been an objection and a

definitive ruling on the issue. That is not the case here.

Franklin Prescriptions’ alleged off-the-record objection is

disputed by the New York Times. More importantly, it is flatly

contradicted by the District Court, which stated that Franklin

Prescriptions’ “recollection of the March 18, 2004 conference

is inaccurate . . . . the Court terminated the conference before

addressing Plaintiff’s presumed damages instruction.” 2004 WL

1770296, at *5. Unlike Smith, there is no consensus that the

District Court was fully apprised of Franklin Prescriptions’

objection and no indication of a definitive trial court ruling on

the matter. Cf. Fed. R. Civ. P. 51(d)(1)(B) (excusing a party’s
8

failure to object on the record where “the court made a

definitive ruling on the record rejecting the request”).

Furthermore, prior to charging the jury, the parties here

were provided with a written draft of the court’s proposed

instructions and explicitly invited to lodge exceptions for the

record. The record reveals no objection to the omission of a

presumed damages instruction. Franklin Prescriptions entered

certain objections to the charge but remained silent on the issue

of presumed damages. Nor did Franklin Prescriptions object to

the relevant aspects of the special verdict form, which instructed

the jury that it could not award damages absent a showing of

actual harm. The verdict form, like the proposed instructions,

precluded an award of presumed damages. Franklin

Prescriptions’ failure to object to either the court’s instructions

or the verdict sheet constitutes a failure to preserve its presumed

damages objection. Neely v. Club Med Mgmt. Servs., Inc., 63

F.3d 166, 200 (3d Cir. 1995) (en banc).

But there is a more fundamental reason to reject Franklin

Prescriptions’ presumed damages challenge—the plain language

of Federal Rule of Civil Procedure 51. The foregoing chain of

events, and the factual dispute the parties continue to press on

appeal, illustrates precisely the rationale behind the 2003

amendment of this rule. The amendment adding Rule 51(c)(1)

took effect on December 1, 2003, and applies to pending

proceedings “insofar as just and practicable.” See Orders of the

Supreme Court of the United States Adopting and Amending

Rules, Fed. R. Civ. P. 23, 51, 53, 54, and 71A (Mar. 17, 2003).
9

The amended rule provides, in clear terms, that parties must

object to proposed jury instructions “on the record, stating

distinctly the matter objected to and the grounds of the

objection.” Fed. R. Civ. P. 51(c)(1). The Advisory Committee

Note explains that “[s]ubdivision (c) . . . . makes explicit the

requirement that the objection be made on the record.”

 Rule 51(c)(1) works in conjunction with Rule 51(b)(2)

and Rule 51(d) to forestall and resolve the very situation

presented here—a dispute among the parties regarding off-therecord objections. Rule 51(b)(2) requires the court to “give the

parties an opportunity to object on the record and out of the

jury’s hearing to the proposed instructions.” Rule 51(c)(1), in

turn, requires that parties avail themselves of the on-the-record

opportunity. If a party fails to do so, Rule 51(d)(2) provides that

only discretionary “plain error” review may be available. See

Advisory Committee Note to Fed. R. Civ. P. 51 (“an error not

preserved under Rule 51 may be reviewed in exceptional

circumstances”). By mandating on-the-record exceptions, and

imposing a penalty for failure to enter them, Rule 51 serves the

critical purpose of apprising the trial court of possible errors in

the charge and affording the court and the parties an opportunity

for correction before submission of the case to the jury. See

Fashauer v. N.J. Transit Rail Operations, 57 F.3d 1269, 1288

(3d Cir. 1995).

The District Court in this case adhered to the Rule 51

framework. The parties were provided with a written draft of

the proposed jury charge and expressly invited to enter on-the-
10

record objections before the case went to the jury. Franklin

Prescriptions availed itself of this opportunity in certain

respects—registering on-the-record objections to several aspects

of the charge—but remained silent on the issue of presumed

damages. Accordingly, the objection was not properly

preserved, and we will consider it under the plain error standard

of review. Fed. R. Civ. P. 51(d)(2).

B.

Under the plain error standard, we consider, inter alia,

the “obviousness of the error, the significance of the interest”

involved, and “the reputation of judicial proceedings if the error

stands uncorrected.” United States v. Richards, 241 F.3d 335,

342 (3d Cir. 2001); see also Advisory Committee Notes to Fed.

R. Civ. P. 51(d)(2). Plain error review is discretionary—it

“should be exercised sparingly” and “should only be invoked

with extreme caution in the civil context.” Fashauer, 57 F.3d at

1289 (quoting United States v. Carson, 52 F.3d 1173, 1188 (2d

Cir. 1995)). Here, we will affirm because we see neither

fundamental error in the omission of a presumed damages

instruction nor prejudice resulting in a miscarriage of justice.

“Although replete with First Amendment implications, a

defamation suit fundamentally is a state cause of action.”

Schiavone Constr. Co. v. Time Inc., 847 F.2d 1069, 1082 (3d

Cir. 1988) (citations omitted). We apply Pennsylvania

defamation law in this diversity matter, with due regard for the

underlying First Amendment principles. Where a question of
11

state law is unsettled, we must predict the Pennsylvania

Supreme Court’s resolution of the issue, giving consideration to

applicable decisions of the intermediate appellate state courts.

Travelers Indem. Co. of Ill. v. DiBartolo, 131 F.3d 343, 348 (3d

Cir. 1997).

At issue is whether omission of a presumed damages

instruction constituted a fundamental error resulting in a

miscarriage of justice under Pennsylvania law. The District

Court ruled that Franklin Prescriptions was not entitled to an

instruction on “presumed damages” under Pennsylvania law.

2004 WL 1770296, at *7 (post-trial opinion and order).

“Presumed damages” allow a defamation plaintiff to recover

compensatory damages without proving the defamatory

statement caused actual harm. The rationale for this approach

is that it may be unfair to require proof of actual harm to

reputation because reputational injury is difficult to prove and

measure. See W. Page Keeton et al., Prosser & Keeton on The

Law of Torts § 116A, at 843 (5th ed. 1984). Before Gertz v.

Robert Welch, Inc., 418 U.S. 323 (1974), presumed damages

were available in Pennsylvania without constitutional

limitations. See, e.g., Fox v. Kahn, 221 A.2d 181, 184 (Pa.

1966). In Gertz, however, the Supreme Court held that the First

Amendment bars presumed damages absent a showing of

“knowledge of falsity or reckless disregard for the truth.” 418

U.S. at 349; see also Dun & Bradstreet v. Greenmoss Builders,

472 U.S. 749 (1985) (limiting Gertz to cases where the
12

challenged speech involves a “matter of public concern”)

(plurality opinion).

As support for the availability of presumed damages,

Franklin Prescriptions cites to a standard form Pennsylvania jury

instruction which provides: “[i]f 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 reputation and the emotional

distress, mental anguish and humiliation such as would result

from such a communication.” 2 Pa. Sug. Stan. Civ. J. Inst. §

13.10(B) (2d ed. 2003). In Frisk v. News Co., the Pennsylvania

Superior Court upheld the validity of this instruction. 523 A.2d

347, 354 (Pa. Super. Ct. 1986).

But seven years after Frisk was decided, the

Pennsylvania Superior Court again considered presumed

damages in Walker v. Grand Central Sanitation, Inc., 634 A.2d

237 (Pa. Super. Ct. 1993). Walker 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.” Id. at

244. Under Walker, a slander per se plaintiff is required to

show “general damages”—proof of harm to reputation or

personal humiliation—but not “special damages”—proof of

actual monetary loss. Id. at 243-44 (“the burden is on the

plaintiff to establish at least general damages”); see also Brinich

v. Jencka, 757 A.2d 388, 397 (Pa. Super. Ct. 2000) (“‘[A]

defendant who publishes a statement which can be considered

slander per se is liable for the proven, actual harm the
 Walker did not explicitly address the availability of 1

presumed damages in a case of actual malice—although it may

signal that presumed damages are unavailable in Pennsylvania

whether or not actual malice is proven. Compare Walker, 634

A.2d at 243 (“this Court entertains a policy against allowing

damages without any proof of actual harm”), with Beverly

Enters., Inc. v. Trump, 182 F.3d 183, 188 n.2 (3d Cir. 1999)

(noting, without citing Walker, that plaintiff need not prove

actual damages where defendant acted with actual malice).

13

publication causes.”) (quoting Walker). Although Walker

appears generally to foreclose presumed damages under

Pennsylvania law, it is not entirely clear whether presumed

damages remain available where the plaintiff proves actual

malice.1

Even if we assume, favorably to Franklin Prescriptions,

that Walker allows an award of presumed damages upon a jury

finding of actual malice, the jury here made no such finding.

Question five of the verdict sheet, to which Franklin

Prescriptions never objected, asked the jury to determine the

following:

Did Franklin Prescriptions, Inc. satisfy its

burden of proving by a preponderance of the

evidence that The New York Times acted

intentionally, recklessly or negligently when it

published the defamatory implication(s) in the

article?
 In the opening paragraph of its brief, Franklin Prescriptions 2

erroneously suggests that the jury found actual malice. Franklin

Prescriptions states the jury found that the New York Times

acted “negligently, recklessly, or intentionally (i.e., with actual

malice).” This quote is misleading. The words in parenthesis,

“i.e., with actual malice,” do not appear in the verdict form and

do not represent a finding of the jury.

14

The jury answered “yes” to this question, finding that the New

York Times acted “intentionally, recklessly or negligently”

(emphasis added). But this is not a finding of actual malice.2

The word “or” leaves open the possibility that the jury’s “yes”

to question five represented its belief that the New York Times

acted negligently. Mere negligence does not rise to the level of

actual malice, which requires a showing of knowledge or

reckless disregard of the publication’s falsity. See Norton v.

Glenn, 860 A.2d 48, 54 (Pa. 2004) (“actual malice will not be

made out on a mere showing that the media defendant was

negligent”). Furthermore, the burden of proof on question five

was “preponderance of the evidence,” not “clear and

convincing,” which a finding of actual malice requires. Bose

Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 511 n.30

(1984).

Question six of the verdict sheet, in turn, instructed the

jury to return to the courtroom if it found insufficient evidence

of actual harm. Franklin Prescriptions did not object to this

question, which asked the jury: 
 We note that the structure of the verdict sheet may well have 3

been to Franklin Prescription’s advantage, as it authorized an

award of damages on the basis of mere negligence without

requiring an antecedent finding of actual malice.

15

Did Franklin Prescriptions, Inc., satisfy its burden

of proving by a preponderance of the evidence

that Franklin suffered actual harm that was

substantially caused by the article?

Answering question six in the negative, the jury found no actual

harm and returned to the courtroom without answering the

subsequent verdict sheet questions concerning actual malice.

In sum, it appears that Pennsylvania law is unsettled on

the availability of presumed damages in this case. Cf. United

States v. Vazquez, 271 F.3d 93, 100 (3d Cir. 2001) (explaining

that error is plain only where the proper course is “clear under

current law”) (en banc); Connelly v. Hyundai Motor Co., 351

F.3d 535, 546 (1st Cir. 2003) (holding that error cannot be plain

where current law is unsettled). In any event, we need not

decide this issue. Even assuming Pennsylvania allows presumed

damages upon a showing of actual malice, Franklin

Prescriptions initially failed to enter an on-the-record objection

to the lack of a presumed damages instruction and then acceded

to a verdict sheet that compelled the jury to return to the

courtroom before addressing the issue of actual malice.3

Because Franklin Prescriptions failed to seek or obtain an

antecedent jury finding of actual malice, we see no prejudice
16

rising to the level of plain error. Furthermore, the District Court

noted that “the evidence at trial fell well short of that necessary

for a showing of actual malice or reckless disregard.” 2004 WL

1770296, at *7. Accordingly, the District Court’s omission of

a presumed damages instruction cannot constitute a fundamental

error resulting in a miscarriage of justice, if it was error at all.

IV.

Franklin Prescriptions also contends it was entitled to an

instruction on defamation per se. According to Franklin

Prescriptions, the District Court’s failure to issue a “defamation

per se” charge mistakenly instructed the jury that proof of

specific financial harm was required to support an award of

compensatory damages. Franklin Prescriptions properly

objected at trial to the lack of a defamation per se instruction.

Defamation or slander per se occurs where a publication

“imputes to another conduct, characteristics, or a condition that

would adversely affect her in her lawful business or trade[.]”

Walker, 634 A.2d at 241. A defamation per se plaintiff need not

prove “special damages,” i.e., monetary or out-of-pocket loss.

Instead, a plaintiff need only prove “general damages,” i.e.,

“proof that one’s reputation was actually affected by the slander,

or that she suffered personal humiliation, or both.” Id. at 242.

The jury charge, while omitting the term “defamation per

se,” made clear that Franklin Prescriptions was not required to

prove financial harm. The jury charge was explicit that “actual

injury can include impairment of reputation,” that Franklin
17

Prescriptions should be compensated for “all harm it suffered,

” and that the jury could compensate for “the actual harm to the

plaintiff’s reputation.” We see no error. The District Court

accurately charged that the jury could award compensation

based on harm to reputation alone.

V. Conclusion

For the foregoing reasons, we will affirm the denial of

the motion for a new trial.