Opinion ID: 352530
Heading Depth: 1
Heading Rank: 3

Heading: Denial of Motions for Directed Verdict and Judgment N. O. V.

Text: 23
24 Summa challenges the trial court's denial of its motions for a directed verdict or a judgment n. o. v. As part of that argument, Summa maintains that this court should conduct a de novo review of the evidence to determine whether it establishes the defense of truth. Normally the standard for appellate review of motions for directed verdict and for judgment n. o. v., is whether, viewing the evidence in the light most favorable to the party opposing the motion, the evidence permits only one reasonable conclusion as to the proper result. 5A Moore's Federal Practice, P 50.02(1) and P 50.07(2) (1975). Kay v. Cessna Aircraft Co., 9 Cir., 1977, 548 F.2d 1370, 1372. Summa contends, however, that de novo review is required here to assure adequate protection of First Amendment rights. 25 Summa explains its views as to the appropriate application of its proposed standard as follows: 26 First, the Court must examine all the evidence. Second, the Court must draw all reasonable inferences and resolve all credibility questions in Maheu's favor. Finally, the Court must make its own determination as to whether Summa proved by a preponderance of the evidence that the gist of the defamatory utterance was true. (Reply Brief at 23) 27 While we have no difficulty with the first two steps, we disagree with the third. 28 The effect of applying Summa's de novo review standard would be to give Summa a second chance to convince an independent fact finder. In effect, we are being told to ignore the jury's factual determination and to reach our own verdict. That we refuse to do. 29 Guam Federation of Teachers, Local 1581, A.F.T. v. Ysrael, 9 Cir., 1974, 492 F.2d 438, cert. denied, 419 U.S. 872, 95 S.Ct. 132, 42 L.Ed.2d 111, supports our conclusion. We held there that the traditional standard for appellate review of motions for a directed verdict and judgment n. o. v. should be applied in this type of case. Ysrael was a libel action in which the issue was the propriety of the granting of a directed verdict for the defendant. We held that a de novo review of all the evidence by the trial judge or this court with an independent decision on credibility and what inferences should be drawn, was not proper. Instead, we stated: 30 We think that in a libel case, as in other cases, the party against whom a motion for summary judgment, a motion for a directed verdict, or a motion for a judgment notwithstanding the verdict is made is entitled to have the evidence viewed in the light most favorable to him and to all inferences that can properly be drawn in his favor by the trier of fact. We think, too, that in such cases it is not only not the duty of the judge, or of this court of appeal, to weigh the credibility of the evidence, or to draw inferences in favor of the moving party (except, of course, when no contrary inference can legitimately be drawn), but that neither the judge nor this court on appeal has the authority to weigh credibility or to choose among legitimate inferences in such cases. 31 The standard against which the evidence must be examined is that of New York Times and its progeny. But the manner in which the evidence is to be examined in the light of that standard is the same as in all other cases in which it is claimed that a case should not go to the jury. 492 F.2d at 441. 32 Thus, in Ysrael, when reviewing a finding on the issue of malice we still applied the traditional standard of review of a jury's fact finding, although a showing of actual malice is constitutionally required. If that standard is applicable to an actual malice determination, then it is even more clearly applicable here, when it is questionable whether the issue of truth rises to the level of a constitutional fact. It is at least arguable that Summa, by conceding New York Times type of malice if the defamatory statement were proven false, has taken any First Amendment issue out of the case. 33 In addition, none of the cases cited by Summa in support of its argument for de novo review is directly applicable to the factual determination of truth after actual malice has been admitted, which is the issue here. The cases consistently deal with an independent evaluation of the record when a constitutional standard was not properly applied in the lower courts. 34 In Garrison v. Louisiana, 1964, 379 U.S. 64, 85 S.Ct. 209, 13 L.Ed.2d 125, the Court held that the New York Times standard of actual malice applied to criminal actions based on the criticism of the official conduct of public officials. The purpose of the Court's examination of the facts was to determine whether the evidence supported a finding of actual malice a finding which the lower court did not make because it did not apply the proper standard. 35 In Pickering v. Board of Education, 1968, 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811, the Court held that, absent proof of actual malice, a teacher's exercise of his right to speak on issues of public importance could not be the basis for his dismissal from public employment. The contents of Pickering's letter were examined to determine whether there was actual malice. As part of that evaluation, the Court mentioned that several of the statements would not come under that standard because they were substantially correct. 36 In Beckley Newspapers Corp. v. Hanks, 1967, 389 U.S. 81, 88 S.Ct. 197, 19 L.Ed.2d 248, the Court held that the instructions on actual malice were incorrect and then examined the record to decide whether the proof presented met the proper constitutional standard; and in Old Dominion Branch No. 496, National Association of Letter Carriers v. Austin, 1974, 418 U.S. 264, 282, 94 S.Ct. 2770, 41 L.Ed.2d 745, the Court reviewed the facts to insure that the speech involved was not protected under the federal labor laws. 1 37 While in Cox Broadcasting Corp. v. Cohn, 1975, 420 U.S. 469, 489-90, 95 S.Ct. 1029, 43 L.Ed.2d 328, the Court said that the defense of truth is constitutionally required when the subject of the publication is a public figure, that does not necessarily mean that the Court's rule regarding de novo review of a jury's finding of actual malice requires a similar factual review when the jury's finding concerns solely the truth of the statement. Indeed, in Cohn, the truthfulness of the newspaper report was never an issue. Cohn was arguing that even though the report was true, its publication invaded his right of privacy. Cohn was not concerned with the appropriate appellate standard of review when evaluating a motion for a directed verdict or a judgment n. o. v. when the sole issue in dispute is the truthfulness of the statement. 38
39 Summa maintains that uncontradicted evidence regarding at least three specific incidents proves the truth of Hughes' statement. Under California law, Summa need not prove the literal truth of the allegedly defamatory accusation, so long as the imputation is substantially true so as to justify the 'gist' or 'sting' of the remark. Emde v. San Joaquin County Central Labor Council, 1943, 23 Cal.2d 146, 160, 143 P.2d 2028; Gantry Construction Co., Inc. v. American Pipe and Construction Co., 1975,49 Cal.App.3d 186, 122 Cal.Rptr. 834, 838-39. See also Restatement (Second) of Torts § 581A, Comment f (1976). Applying that standard, after a careful review of the record, we conclude that there were sufficient disputed facts to require the case to go to the jury. 40
41 First, Summa claims that the uncontradicted evidence establishes that Maheu embezzled money which he was supposed to use to make lease payments to the Tucson Airport Authority (TAA) under a lease of a hangar. Summa executive Raymond Holliday and Maheu had worked out an arrangement under which Maheu was to pay the monthly rental to TAA on Summa's behalf. A few days before each payment was due, Summa sent Maheu at his Los Angeles office a check payable to Robert A. Maheu Associates in the exact amount required to cover that month's payment. Maheu testified that the checks were deposited in his firm's general account; and whenever there was a sufficient amount of money in the account, he made payments to TAA. Some were quite late. When the lease terminated, Maheu was holding approximately $74,000 of this money and he was roughly nine months behind on the rental payments. It was not until September, 1967, or more than nine months after the payment was due, that Maheu made the final rental payment to TAA on Summa's behalf. 42 Maheu testified that there was no explicit arrangement between himself and Summa which required him to use the precise check he received from Summa to pay the rent, or to pay the rent when it became due. He testified that he did not view the checks as entrusted money but rather as payments made to enable him to render a service, i. e., to see that the rent was eventually paid. He maintained that he could reasonably believe that he had the right to use the money so long as the rent was ultimately paid. 43 As improbable as Maheu's version may initially sound, it must be viewed in light of the overall relationship between Maheu and Hughes. Our description is based on Maheu's testimony. Maheu was first retained by Hughes in 1954 or 1955. Maheu's duties over the years were diverse, to say the least; but, basically, he served as a general troubleshooter. Hughes several times expressed his intention that Maheu would become his alter ego, representing him before government agencies and maintaining contacts with the outside world from which Hughes had withdrawn. From 1961 through 1965, Maheu functioned as Hughes' personal representative at all levels of government and was involved in a wide range of business transactions. Despite his extensive work for Hughes, Maheu had never had a face-to-face conversation with his employer. All communication was by telephone or written memoranda. Maheu was often given authority to handle projects as he thought necessary and the financial arrangements which he maintained with Hughes and Summa were often rather loosely handled. The Tucson rent arrangement was of that type. While we may question Maheu's story that he honestly believed that he had authority to use the rent checks, still, in light of this rather unusual business relationship, his version does raise a factual question for the jury. 44
45 Next, Summa claims that the evidence establishes that Maheu committed theft by taking $59,000 from the Hughes-owned Silver Slipper casino in December, 1969. Maheu responds that he received the $59,000 as a loan in an arms-length transaction with Robert Morgan, a Summa employee. The only factual dispute is whether Robert Morgan was Maheu's subordinate who merely wrote out a check for Maheu on Maheu's orders or whether Morgan had authority on Summa's behalf to approve or reject Maheu's loan request. 46 Maheu testified that he had never done anything to exercise control over Morgan. Summa maintains that Maheu contradicted himself by testifying at one point, I was not in a position where I had to explain anything to Mr. Morgan. (R.T. 10,447) Taking that statement in the context within which it was made, it is not clear whether Maheu was referring to his relationship with Robert Morgan in general or to his opinion of his responsibility to report one particular business deal to him. In addition, while the statement implies that Maheu never had to explain what he did to Robert Morgan, it does not clearly state that Morgan was under his authority on all matters. At most, it simply says that he was generally not under Morgan's authority. 47 Morgan testified that he took all his orders in Nevada from Maheu. But Collier, Summa's principal fiscal officer in Houston, testified that he had sent Morgan to Nevada and that Morgan was responsible for compiling financial statements for the Nevada casinos. Holliday, the executive vice president of Summa, stated that, to his knowledge, Morgan reported to Collier and was not under Maheu's supervision or direction. 48 Overall, Maheu's role in the Hughes organization was ambiguous at best. At some points, Summa executives seemed to be in control (e. g., the day to day operation of the casinos); and at other times, Hughes relied on Maheu (e. g., land acquisition, political contributions, etc.). On the basis of the evidence presented, Summa failed to establish conclusively that Maheu stole the $59,000. Again, this is a question of fact for resolution by the jury. 49
50 Finally, Summa points to $100,000 which Maheu received from Hughes' personal bank account in May, 1970, ostensibly for political contributions which, as was later discovered, he had not paid. Maheu explained that he often made the political contributions first and then later asked Hughes to reimburse him for the expenditures. He said that the political funds which he distributed were so loosely handled that his accountant made an error and on that basis Maheu requested the money unnecessarily. His accounts showed that the $100,000 was for political contributions of which approximately $13,000 had been so used, and the remaining $87,000 appeared on his books as a debt Maheu owed Hughes. While again this version may be difficult to believe, it comes down to the credibility of Maheu's testimony that he relied upon his accountant's error and that Hughes approved of such loose accounting procedures. Again, this is a factual question for the jury to resolve. While we might not have reached the same conclusion as the jury, that is not the proper standard of appellate review. 51 The focal point of judicial review is the reasonableness of the particular inference or conclusion drawn by the jury. It is the jury, not the court, which is the fact-finding body. It weighs the contradictory evidence and inferences, judges the credibility of witnesses, receives expert instructions, and draws the ultimate conclusion as to the facts. . . . That conclusion, whether it relates to negligence, causation or any other factual matter, cannot be ignored. Courts are not free to reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions or because judges feel that other results are more reasonable. 52 Tennant v. Peoria & P. U. Ry. Co., 1944, 321 U.S. 29, 35, 64 S.Ct. 409, 412, 88 L.Ed. 520. 53