Court Opinion

ID: 5921
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:11:09+00
Date Added: 2024-06-11T16:44:52.225117
License: Public Domain

United States Court of Appeals,

                                            Fifth Circuit.

                                            No. 92-8389.

 Edwin De Steiguer SNEAD and Georgetown Railroad Co., Inc., Plaintiffs-Counter-Defendants-
Appellants, Cross-Appellees,

                                                  v.

REDLAND AGGREGATES LTD. and Standard Railway Wagon Co., Ltd., Defendants-Counter-
Claimants-Appellees, Cross-Appellants.

                                           Aug. 27, 1993.

Appeals from the United States District Court for the Western District of Texas.

Before SMITH, DUHÉ, and WIENER, Circuit Judges.

       JERRY E. SMITH, Circuit Judge:

                                                  I.

                                                  A.

       Edwin de Steiguer Snead, a plaintiff, is the chairman of Georgetown Railroad Co.

("Georgetown"), another plaintiff. In 1984, Snead and his brother Bill1 began designing and building

a new type of railroad car that they called a "dump train," which consists of a group of open-topped

railroad hopper cars joined together and to a transfer car. A conveyer belt runs under each hopper

car to the transfer car. Because each hopper car has sloping side walls and gates in the bottom, bulk

material can be discharged easily from the cars onto the conveyer belt, which then carries the material

to the transfer car; the transfer car unloads material onto either side of the tracks. The advantage

of using a dump train instead of other commercially-used train cars is that material can be unloaded

without additional equipment or special facilities at the unloading site.

       In 1985, Snead filed a patent application on the dump train invention; the Patent Office

rejected Snead's application because a German patent application filed ten years earlier had disclosed

a similar invention. Snead then pursued and obtained patents on several elements of the dump train

   1
    Bill Snead is not a party to this appeal, and all references herein are to Ned Snead unless
otherwise noted.
but not on the general concept.

        Snead completed the dump train in 1985 and began promoting it publicly; Georgetown also

used the dump train commercially in Texas. In 1986, Snead gave a presentation on the dump train

in Chattanooga, Tennessee, after which personnel from defendant Redland Aggregates, Ltd.

("Redland"), approached Snead and expressed interest in developing such a train for the European

market. Redland is an English company that quarries sand, gravel, and crushed stone.

        In November, 1986, Snead met in England with Redland and a representative from defendant

Standard Wagon ("Standard"), Redland's preferred train supplier. Snead explained the dump train

and provided the companies with a brochure stating that a patent was pending, a videotape, and

photographs of the dump train. Snead also answered technical questions and described mechanical

and structural details. The parties discussed a royalty and set up a meeting in Texas to view the dump

train in operation. On November 14, 1986, the parties met at Georgetown's facilities.

        On November 26, the parties again met at the Georgetown facilities. Plaintiffs demonstrated

the operation of the dump train and disclosed more of the technical advantages and construction of

the trains. That evening, Snead invited representatives from Standard and Redland to spend the night

at his lakehouse. The representatives inquired about the dump train patents, and Snead stated that

the patents existed but were his personal property and that he would not discuss them.

        The following day, Snead presented the Redland and Standard representatives with a licensing

agreement covering the dump train. Although Snead previously had not mentioned anything about

confidentiality, he expected the representatives to sign the agreement. The representatives refused

to do so without authorization from England and said they would not sign until the patent question

was resolved. Snead became angry and told them that they were "sure as hell going to sign

something" before leaving.

        Snead later returned with a "Non-Disclosure Agreement." Again, the representatives would

not agree to the terms of the agreement. Snead again became angry and left the room, returning with

a third document entitled "Non-Disclosure Agreement," which the representatives finally agreed to

sign.
         Under the Non-Disclosure Agreement, Georgetown promised to give Redland and Standard

information about the dump train to allow them to study the feasibility of use in the United Kingdom.

In return, Redland and Standard agreed to keep confidential any information provided by Georgetown

and to provide Georgetown with copies of all information generated in connection with the feasibility

study. After this agreement was signed, Georgetown sent Standard a set of drawings of the dump

train.

         Standard had to consult British Rail regarding the feasibility of using the dump train in

England. British Rail determined that such use was not feasible, so Redland and Standard decided

to design and build a train suitable for British Rail. Because Redland and Standard still believed that

Snead had patent protection, licensing discussions continued.

         After consulting with its attorneys, Standard decided that it would design around

Georgetown's United Kingdom patent application and would make no further use of the drawings and

data supplied by Georgetown. Standard informed Georgetown of the method by which it would

design around the patent. Standard then completed and sold its version of the dump train.

                                                  B.

         On February 1, 1988, Snead and Georgetown filed suit against Redland and Standard for

misappropriation of trade secrets and breach of a confidential relationship. On February 5, 1988,

Snead issued a press release, regarding the suit, that accuses Standard and Redland of "international

theft," "industrial espionage," and "international piracy." Redland and Standard counterclaimed for

libel.

         After a bench trial, the district court rendered judgment in favor of Redland and Standard on

Snead and Georgetown's claims and on the counterclaims. The district court held that Snead and

Georgetown had no trade secret rights in their dump train and that no confidential relationship ever

existed. Because Snead never had patent protection for the dump train concept, the confidentiality

agreement was void, as Snead had procured it fraudulently. On the libel counterclaim, the judge

found Snead and Georgetown guilty of libel per se and held that Snead had acted with actual malice

in issuing the press release. The court awarded Redland and Standard $1 each in compensatory
damages and $500,000 each in punitive damages.

          Snead and Georgetown moved for rehearing and for a new trial on the libel counterclaim. The

district court denied the motion for new trial and clarified its original findings with another opinion.

                                                    II.

          Snead2 claims that the award of punitive damages was erroneous.3 Before addressing those

arguments, we first must address the issue of whether Redland and Standard are public or private

figures and whether the relevant speech involved a matter of public or private concern. Only after

making these findings can we properly analyze various issues raised on appeal, as the status of the

libel plaintiff and the alleged libelous speech determines the minimum constitutionally-required

standard of fault.

          The district court did not make any findings on these issues. Because both inquiries are issues

of law and the record is fully developed, however, we may address them without remanding.4

                                                    A.

          First, we must decide whether Redland and Standard are public or private figures.5 As one

court observed in a much-quoted passage, trying to decide whether a particular plaintiff is a public

or private figure "is much like trying to nail a jellyfish to the wall." Rosanova v. Playboy Enters., 411

   2
       We use Snead's name to refer to the arguments raised by both Snead and Georgetown.
   3
    We reject Snead's argument that the libel counterclaim was for product disparagement.
Although Redland and Standard may have referred to their claim as being one for trade libel, their
pleadings consistently cite the Texas libel statute as the basis for their claims and use the terms
libel and defamation. We similarly reject Snead's argument that a corporation may not sustain a
cause of action under Texas law for libel. The Texas Supreme Court has held that corporations,
as opposed to businesses, may bring a cause of action for libel. Brown v. Petrolite, 965 F.2d 38,
43 n. 5 (5th Cir.1992); General Motors Acceptance Corp. v. Howard, 487 S.W.2d 708, 712
(Tex.1972).
   4
    See Rebozo v. Washington Post Co., 637 F.2d 375, 379 (5th Cir. Feb.1981) (public figure
issue is a question of law for the trial court to decide); Dun & Bradstreet v. Greenmoss Builders,
472 U.S. 749, 761-63, 105 S. Ct. 2939, 2946-47, 86 L. Ed. 2d 593 (1985) (plurality opinion)
(deciding public concern issue where lower courts had not ruled on the issue.).
   5
    Redland and Standard argue that Snead has waived any claim that the actual malice rule
applies because he did not raise the First Amendment as an affirmative defense. We disagree.
The First Amendment imposes on libel plaintiffs the burden of proving that the defendant's
conduct satisfies a certain standard of fault; it does not create an affirmative defense that must be
pled.
F.Supp. 440, 443 (S.D.Ga.1976), aff'd, 580 F.2d 859 (5th Cir.1978). The inquiry becomes even

more difficult when the libel plaintiff is a corporation, as our prior cases do not establish a method

for determining whether a corporation is a public or private figure. See Golden Bear Distrib. Sys.

v. Chase Revel, Inc., 708 F.2d 944 (5th Cir.1983) (finding that a corporation was a private figure

without developing a test for that inquiry).

        In Gertz v. Robert Welch, Inc., 418 U.S. 323, 344-45, 94 S. Ct. 2997, 3009, 41 L. Ed. 2d 789

(1974), the Court gave two policy justifications for differentiating between public and private figures.

First, public figures "enjoy significantly greater access to the channels of effective communication and

hence have a more realistic opportunity to counteract false statements than private individuals

normally enjoy. Private individuals are therefore more vulnerable to injury, and the state interest in

protecting them is correspondingly greater." Id. at 344, 94 S.Ct. at 3009. Second, public figures

normally have thrust themselves into the public eye, inviting closer scrutiny than might otherwise be

the case. In other words, public figures "invite attention and comment." Id. at 344-45, 94 S.Ct. at

3009.

        These justifications for the public/private dichotomy do not suggest a general rule to be

applied to corporations.6 As to the first criteria, corporations do not necessarily have greater access

to the channels of effective communication than do individuals. Some corporations, such as media

corporations or large conglomerates, obviously have such access, but the bulk of corporations do not.

Similarly, the seco nd criteria does not suggest a generalization for corporations. Although some

corporations voluntarily thrust themselves into the public eye, the majority of corporations do not.

        Because the two Gertz justifications for the public figure/private figure dichotomy do not

suggest a general rule to be applied to corporations, t he inquiry must be made on a case-by-case

basis, examining all the relevant facts and circumstances. We suggest several factors here but we do

not suggest that these are the only factors to consider.

        First, the notoriety of the corporation to the average individual in the relevant geographical

   6
   But see Patricia Fetzer, The Corporate Defamation Plaintiff as First Amendment "Public
Figure": Nailing the Jellyfish, 68 IOWA L.REV. 35, 49-86 (1982) (arguing that corporations
should be more susceptible to public figure status than are individuals).
area is relevant. Notoriety will be affected by many factors, such as the size and nationality of the

corporation. Here, we safely can assume that the majority of Americans has never heard of Redland

or Standard. Although they are not small corporations, they are alien corporations that apparently

have no United States subsidiaries.

        Second, the nature of the corporation's business must be considered. Redland mines stone,

and Standard builds railroad cars. Corporations in these businesses do not ordinarily become

household names. Prominent consumer goods makers or merchants, as well as consumer service

corporations, are much more likely to attain public figure status.

        Third, courts should consider the frequency and intensity of media scrutiny that a corporation

normally receives. For example, even a small corporation that does not deal with consumers might

attain notoriety if it engages in frequent corporate takeovers that become widely publicized. In this

case, the record contains no evidence that Redland or Standard have received significant past

publicity.7 On the basis of these factors, we conclude that Redland and Standard should be deemed

private figures.

                                                 B.

        Next, we must consider whether the speech involves a matter of public or private concern.

In making this inquiry, we must consider the form, content, and context of the speech. Connick v.

Myers, 461 U.S. 138, 147-48, 103 S. Ct. 1684, 1690-91, 75 L. Ed. 2d 708 (1983); Dun & Bradstreet,
472 U.S. at 761, 105 S.Ct. at 2946.

         As to the form of the speech, Snead argues that because the defamatory material was

contained in a press release, it was a matter of public concern. Although the fact that the material

was in a press release has so me relevance, that relevance is diminished when the press release is

unsolicited and not in response to previous media coverage of an issue. A speaker cannot turn his

   7
    The record does reveal that the press release that is the subject of this suit was reprinted in
several industry publications. Although some individuals may be considered public figures in a
small geographical community, we decline to extend such reasoning to an industry. After all,
almost every individual or corporation is well known among some small group of people. As we
read Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S. Ct. 1975, 18 L. Ed. 2d 1094 (1967), a
public figure must be known to the public at large, not merely to a select group of individuals
similarly situated to the individual or corporation in question.
speech into a matter of public concern simply by issuing a press release.

        Next, we consider the content of the speech. Snead makes three arguments as to why the

content of the speech raises a matter of public concern. First, he argues that the press rel ease

concerns a lawsuit and that lawsuits are a matter of public concern. Second, he contends that the

allegations in the lawsuit regard industrial espionage and international competition, subjects widely

discussed in the media. Third, Snead contends that his comments concerned matters of special

interest to the railroad and construction industry.

        To support his first argument, Snead cites Time, Inc. v. Firestone, 424 U.S. 448, 456-57, 96
S. Ct. 958, 966-67, 47 L. Ed. 2d 154 (1976), for the proposition that lawsuits are matters of public

concern. To the contrary, the Court recognized that individuals do not "forfeit that degree of

protection which the law of defamation would otherwise afford them simply by virtue of their being

drawn into a courtroom." Id. at 457, 96 S.Ct. at 966-67. Similarly, here, Redland and Standard were

drawn into this controversy against their will.

        Snead's second argument, on the other hand, is relevant to the issue. He argues that

international competition and industrial espionage are matters of public concern. Although Snead

may be correct that the public is concerned about these issues, his speech does not concern an

ongoing public debate about international competition and industrial espionage. The press release

was not aimed at enlightening the general public; it "was speech solely in the individual interest of

the speaker and it s specific business audience." Dun & Bradstreet, 472 U.S. at 762, 105 S.Ct. at

2947. Although an intellectual property dispute might rise to a matter of public concern if it concerns

a product of extreme importance (e.g., a miracle drug), ordinarily such disputes between two parties

will be matters of private concern.

        Snead's third argument aids Redland and Standard. Even if the record proves that this dispute

was of particular interest to the railroad and construction industries, it does not mean it was a matter

of interest to the general public. The fact that the press release was reported primarily in industry

publications indicates that the speech was not a matter of public concern but rather a matter of private

concern of interest only to a particular industry.
        Finally, we consider the context of the speech. The press release was an unsolicited comment

on a lawsuit between private parties, not issued in response to any existing matter of public concern.

In such a context, we can only conclude that the speech was of private concern. Overall, the three

relevant factors strongly support the conclusion that the speech at issue was a matter of private

concern.

                                                   III.

        Snead argues that the award of punitive damages must be vacated because (1) he did not

speak with actual malice, (2) the trial court did not award actual damages, and (3) the award is

unconstitutional. Redland and Standard cross-appeal the damages determination, arguing that the

district court (1) should have awarded presumed damages and (2) should have awarded more actual

damages.

                                                   A.

        Redland and Standard argue that the district court should have awarded more actual damages.

In its original opinion, the district court stated the following:

        While the Court finds Defendants were damaged by the press release and its media coverage,
        it does not find from the evidence any specific actual damages. In cases involving libel per
        se, however, actual damages are presumed and a party may recover exemplary damages even
        though they [sic] did not suffer any actual damages.

It appears, from this, that the court initially held that Redland and Standard had not proved any actual

damages, but the court assumed that it could award exemplary damages, even in the absence of actual

damages.

        On motion for rehearing, Snead argued that the court could not award punitive damages

without a finding of actual damages. In response, the court stated as follows:

        In its opinion, the Court expressly found, by a preponderance of the evidence, each of the
        Defendants sustained substantial actual damages as a result of Ned Snead's conduct,
        individually and on behalf of the Georgetown Railroad Company, Inc.... The exact actual
        damages sustained by either Defendant, under the circumstances of this case, would be
        impossible to establish by competent evidence. The Court awarded each Defendant $1.00 in
        actual damages, but could easily have awarded substantially more. While the Court declined
        to be persuaded by Defendants' evidence that the actions of Ned Snead caused an irreversible
        loss in the value of Redland's stock or a 50 percent reduction in value of the good will of
        Standard, this did not mean there were not substantial actual damages, and actual damages
        in six figures for each Defendant could well have been awarded with additional punitive
        damages.
We read these two passages as a holding that Redland and Standard could not prove any actual

damages. When the court refers to the possibility of awarding actual damages in six figures, we think

it was referring to the possibility of awarding presumed damages. This is the only fair reading of the

passage, as the court said it would be impossible to establish actual damages.

       We affirm the district court's finding that Redland and Standard suffered no quantifiable actual

damages.8 The district court correctly held that Redland and Standard cannot point to evidence in

the record sufficient to establish any actual damages with the required specificity.

                                                 B.

        Redland and Standard argue that the district court should have awarded presumed damages.

Under Texas law, presumed damages are available in cases of libel per se. Leyendecker & Assocs.

v. Wechter, 683 S.W.2d 369, 374 (Tex.1984). Because damage to a person's reputation is difficult

to quantify, the law allows the factfinder to presume damages to compensate for that damage. Even

if the factfinder finds that the plaintiff's reputation was damaged, however, it may choose not to

award presumed damages.           Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 488

(Tex.App.—Corpus Christi 1989, writ denied).

       The excerpted portions from the district court's opinions quoted above indicate that the court

may have misunderstood Texas law regarding presumed damages. In the first excerpted passage, the

court states that in a case of libel per se, the law will presume damages, allowing a party to recover

exemplary damages even without a showing of actual damages.

       As we explain in part III.C, infra, this view of Texas law is partially incorrect. We find no

other significant references to presumed damages in either of the district court's opinions. In the

second excerpted passage quoted above, the court refers to the potential of awarding significantly

greater actual damages. In part III.A, supra, we noted that the court probably was referring to

presumed damages when it used the term "actual damages" in this passage.

   8
    Because Redland and Standard have not proved that they are entitled to actual damages, we
need not decide whether the First Amendment requires a libel plaintiff to prove that a defendant
breached a certain standard of care in order to recover actual damages in a case involving a
private figure and a matter of private concern. We leave that issue for another day.
       We find these passages somewhat ambiguous on the issue of presumed damages. The district

court never explicitly stated that it was not awarding Redland and Standard presumed damages.

Under Texas law, as we observed, the district court is allowed to find that Snead committed a libel

per se, yet choose to award no presumed damages. It is possible that the district court elected not

to award such damages. On the other hand, the district court may have believed, erroneously, that

under Texas law, presumed damages are merely a legal fiction used to justify awarding punitive

damages when no actual damages can be proven.

       At the least, the district court's opinion raises sufficient ambiguity to justify a remand to

consider whether it wishes to award presumed damages. The district court's decision on the

presumed damages issue necessarily will affect the availability of punitive damages, as we explain in

part III.C. Because Snead does not dispute that the speech in question was libel per se, the district

court need only decide whether it wishes to award presumed damages and whether such an award

would be constitutional.

        The parties dispute what constitutional standard of care is required in this case. Because we

have concluded above that this case involves a private figure and a matter of private concern (a

"private/private case"), we now decide the res nova question of what standard of care, if any, is

required by t he First Amendment in a private/private case. This will guide the district court on

remand and avoid the possibility of a second remand.

       In Gertz v. Robert Welch, Inc., 418 U.S. 323, 349, 94 S. Ct. 2997, 3011, 41 L. Ed. 2d 789

(1974), the Court held that the First Amendment prohibits awards of presumed and punitive damages

unless the plaintiff can prove that the statements were made with actual malice.9 To recover actual

   9
    The term "actual malice" is somewhat misleading, as it is a term of art crafted in New York
Times v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), that has nothing to do
with "malice" as the term ordinarily is used. For a statement to be made with "actual malice," it
must be made with knowledge that it is false or with reckless disregard for its falsity. Id. at 279-
80, 84 S. Ct. at 725-26.

               "Actual malice" must be distinguished from "common law malice." To prove that
       the defendant acted with "common law malice," the plaintiff must show that the defendant
       acted out of spite, ill will, or vengeance. Many states require a showing of "common law
       malice" as an additional requirement for recovery of punitive damages. RODNEY A.
       SNOLLA, LAW OR DEFAMATION § 9.08[3][b], at 9-19 (1992).
damages, the plaintiff need not prove actual malice, but under the First Amendment, states cannot

impose liability without fault. Id. at 347, 94 S.Ct. at 3010-11. Gertz was the Court's first extension

of the actual malice rule to private figures. Prior to Gertz, the Court had held that the First

Amendment prohibits public officials and public figures from recovering damages (actual, presumed

or punitive) for libel unless the statements were made with actual malice. Gertz, 418 U.S. at 334-336,

94 S.Ct. at 3004-05 (citing Sullivan, 376 U.S. at 279-80, 84 S. Ct. at 725-26 (public officials), and

Curtis, 388 U.S. at 162, 87 S.Ct. at 1995 (public figures)).

        In Dun & Bradstreet, the Court added yet another dichotomy to Constitutional libel law.10

After Dun & Bradstreet, the constitutional fault standards defined in Gertz for private figures apply

only to cases involving speech on an issue of public concern.11 Five Justices agreed that in

private/private cases, the plaintiff is not constitutionally required to prove actual malice to recover

presumed or punitive damages. 472 U.S. at 760-61, 105 S.Ct. at 2946 (plurality); 472 U.S. at 763-

64, 105 S. Ct. at 2947-48 (Burger, C.J., concurring); 472 U.S. at 773-74, 105 S.Ct. at 2953 (White,

J., concurring). Unfortunately, the Court did not provide any guidance as to how to determine

whether speech relates to an issue of public rather than private concern. While the Court did hold

                Prior to Sullivan, Texas law required such a showing. Leyendecker, 683 S.W.2d
        at 375 (quoting Houston Chronicle Publishing Co. v. Bowen, 182 S.W. 61, 65
        (Tex.Civ.App.—Galveston 1915, writ ref'd)). Under Texas law, however, malice could be
        inferred "from the fact that the act complained of was done with such utter recklessness as
        to indicate a disregard of the consequences." Id. Where malice was inferred, it was
        known as "implied malice."

               Texas law thus required a showing of "common law malice," but the plaintiff could
        make that showing by proving either "implied malice" or "express malice." Fessinger v. El
        Paso Times Co., 154 S.W. 1171, 1175 (Tex.Civ.App.—El Paso 1913, writ ref'd). The
        term "express malice" referred simply to the traditional meaning of "common law
        malice"—personal ill will or animosity. Id.
   10
      The Dun & Bradstreet Court apparently rejected another suggested dichotomy. At least five
Justices eschewed the suggestion that the status of the defendant as a member or nonmember of
the media should affect the standard of fault. 472 U.S. at 773, 105 S.Ct. at 2952-53 (White, J.,
concurring); 472 U.S. at 783-84, 105 S.Ct. at 2958 (Brennan, Marshall, Blackmun and Stevens,
JJ., dissenting; Blackmun, J.; and Stevens, J.). Because the Court rejected that dichotomy, we
do not consider significant the fact that Snead is not a media defendant.
   11
     The effect of Dun & Bradstreet on the constitutional standards of fault that apply in cases
involving public officials or figures and matters of private concern is uncertain. SHOLLA, supra
note 9, § 3.04.
that plaintiffs in a private/private case need not demonstrate actual malice, it failed to explain whether

the Constitution imposes a minimum standard of fault.

        "Under the First Amendment, there is no such thing as a false idea. However pernicious an

opinion may seem, we depend for its correction not on the conscience of judges and juries but on the

competition of other ideas." Gertz, 418 U.S. at 339-40, 94 S.Ct. at 3006-07. Even harmful speech

receives protection under the First Amendment.

        On the other hand, "there is no constitutional value in false statements of fact. Neither the

intentional lie nor the careless error materially advances society's interest in "uninhibited, robust, and

wide-open' debate on public issues." Id. at 340, 94 S.Ct. at 3007 (citation omitted). "They belong

to that category of utterances which "are no essential part of any exposition of ideas, and are of such

slight social value as a step to truth that any benefit that may be derived from them is clearly

outweighed by the social interest in order and morality.' " Id. (citation omitted). False statements

of fact are "not worthy of constitutional protection." Id.

        The First Amendment's role in establishing standards of fault, then, has nothing to do with

constitutional protection for the libel itself. Rather, the Court has recognized that punishment of libel

runs the risk of chilling the exercise of the rights of free speech and press. Id. On the other hand, the

Court also has acknowledged that states have a significant interest in protecting the reputation of

individuals by compensating them for harm inflicted by defamatory falsehoods. Id. at 341, 94 S.Ct.

at 3007-08. Because these two values are in tension, the past thirty years of constitutional libel

jurisprudence have involved a "continuing effort to define the proper accommodation between these

competing concerns...." Id. at 342, 94 S.Ct. at 3008.

        Although speech on matters of private concern is of less constitutional value than is speech

on matters of public concern, Connick v. Myers, 461 U.S. 138, 146-47, 103 S. Ct. 1684, 1689-90,

75 L. Ed. 2d 708 (1983), such speech is not totally unprotected by the First Amendment. Id. at 147,

103 S.Ct. at 1690 (cited in Dun & Bradstreet, 472 U.S. at 760, 105 S.Ct. at 2946 (plurality opinion)).

Our conclusion today should not be construed to diminish that constitutional protection. Just as the

Court has done in a line of cases after Sullivan, we must determine the proper balance between the
protected speech at issue and the states' interest in protecting the reputation of private individuals.

         In Dun & Bradstreet, the Court indicated that states should be allowed to return to their own

common law rules in private/private cases. Justices Burger and White stated that they would hold

that the Constitution imposes no minimum standard of fault where the case involves a private figure.
472 U.S. at 763-74, 105 S.Ct. at 2947-48 (Burger, C.J., concurring); 472 U.S. at 772, 105 S.Ct. at

2952 (White, J., concurring). Although Justice Powell's opinion for a three-Justice plurality appears

to adhere to the Gertz holding where issues of public concern are involved, his opinion contains

strong hints that the plurality intended for the holding in Dun & Bradstreet to allow states to return

to common law rules in private/private cases. See SMOLLA, supra note 9, § 3.02[5].

         First, and most importantly, the Court states the following:

         The dissent, purporting to apply the same balancing test that we do today, concludes that
         even speech on purely private matters is entitled to the protections of Gertz.... The dissent's
         "balance," moreover, would lead to the pro tection of all libels—no matter how attenuated
         their constitutional interest.... The dissent would, in effect, constitutionalize the entire
         common law of libel.
472 U.S. at 761 n. 7, 105 S. Ct. at 2946 n. 7. Because the plurality expressed its distaste for

constitutionalizing the entire common law of libel, it appears to have left the law up to the states in

private/private cases.

         Second, t he plurality cited with approval the leading state court decision that held that the

Gertz constitutional standards do not apply in cases of purely private defamation. 472 U.S. at 760,
105 S. Ct. at 2946 (citing Harley-Davidson Motorsports v. Markley, 279 Or. 361, 568 P.2d 1359,

1364 (1977)). The reasoning in Markley, 568 P.2d at 1364, is consistent with our conclusion that

the lower First Amendment interest in private/private cases is outweighed by the states' interest in

protecting reputation.

         Based upon our reading of Justice Powell's plurality opinion, we believe that five Justices of

the Dun & Bradstreet Court supported co mmon law standards for private/private cases. We

therefore conclude that the Constitution imposes no minimum standard of fault in private/private libel

cases.

         Under Texas law, presumed damages are available in cases of libel per se without any
showing of fault on the part of the defendant. E.g., Jenkins v. Taylor, 4 S.W.2d 656, 661

(Tex.Civ.App.—Austin 1928, no writ) (presumed damages available in case of libel per se as a matter

of law); see also 28 TEXAS JUR.3d, Damages § 111 (1983). Because neither the Constitution nor

Texas law imposes any fault requirement for the recovery of presumed damages in private/private

cases of libel per se, the district court need only determine on remand whether it wishes to award

such damages.

                                                  C.

        Next, we consider the award of punitive damages. Snead argues that the award must be

vacated because (1) he did not speak with actual malice, (2) the trial court did not award actual

damages, and (3) the award is unconstitutional. We first address Snead's second argument, as the

resolution of this issue will affect our treatment of the other two.

        Snead asserts that the district court erred in awarding punitive damages because it awarded

nominal rather than actual damages. We agree. As we recent ly explained, under Texas law, the

plaintiff is foreclosed from recovering punitive damages unless the factfinder has awarded actual

damages. Brown v. Petrolite Corp., 965 F.2d 38, 48-49 (5th Cir.1992) (citing Doubleday & Co. v.

Rogers, 674 S.W.2d 751, 754 (Tex.1984)).12 Where t he court awards only nominal damages, no

punitive damages may be given. Id. at 49.

        Redland and Standard try to avoid the application of this rule by arguing that the $1 awarded

to each defendant on the counterclaim constitutes actual damages rather than nominal damages. We

disagree. An award o f $1 in compensatory damages will almost always be considered nominal

damages. See Petrolite, 965 F.2d at 38 (treating a compensatory award of $1 as nominal damages).13

   12
    In Petrolite, we also stated that in a private/private case, a plaintiff, under constitutional and
Texas law, must prove actual malice to recover punitive damages. 965 F.2d at 46 (citing Gertz,
418 U.S. at 350, 94 S.Ct. at 3012; Golden Bear Distrib. Sys. v. Chase Revel, Inc., 708 F.2d 944,
947 (5th Cir.1983); A.H. Belo Corp. v. Rayzor, 644 S.W.2d 71, 84-85 (Tex.App.—Fort Worth
1982, writ ref'd n.r.e.)). The statement regarding actual malice is plainly inconsistent with Dun &
Bradstreet, but it is dictum, which does not bind us. See Hensgens v. Deere & Co., 833 F.2d
1179, 1182 n. 1 (5th Cir.1987), cert. denied, 493 U.S. 851, 110 S. Ct. 150, 107 L. Ed. 2d 108
(1989).
   13
    In a rare case, $1 might be the amount of actual damages suffered. However, to deem an
award of $1 actual, rather than nominal, the award of $1 must be supported by competent
Although the district court's opinion indicates that Redland and Standard suffered damage to their

reputation, the $1 awarded here was for nominal damages. Because, as we noted above, the record

contains no evidence that Redland and Standard suffered any actual damages, we conclude that the

district court only awarded nominal damages. Consequently, we vacate the award of punitive

damages.

        We need not address Snead's claim that the punitive damage award is unconstitutional because

of its disproportion to the actual damage award. Because we concluded in part III.B, supra, that the

Constitution imposes no minimum standard of fault for the recovery of presumed or punitive damages

in private/private cases, we vacate the district court's finding of actual malice, as it now is irrelevant

to this case.

         Although the Constitution imposes no standard of fault in private/private cases, Texas law

requires the defendant to act with common law malice to justify a punitive damage award.

Leyendecker, 683 S.W.2d at 375.14 Because the district court held that Snead acted with common

law malice and Snead did no t appeal that finding, the availability of punitive damages on remand

depends only upon whether the district court chooses to award presumed damages.

         To guide the district court on remand, we also resolve a dispute over the availability of

punitive damages where the plaintiff recovers only presumed damages. Under Texas law, an award

of presumed damages can support an award of punitive damages.15 In Leyendecker, 683 S.W.2d at

372-75, the court upheld an award of presumed damages in a case of libel per se and affirmed a

punitive damage award in spite of the fact that the plaintiff had not proven any actual damages.

        Citing Doubleday, Snead argues that presumed damages will not support an award of punitive

evidence that proves that $1 in actual damages was all the damage that the plaintiff suffered.
   14
     As we have discussed, see supra note 9, the plaintiff can prove common law malice under
Texas law either by showing ill will (express malice) or utter recklessness (implied malice). In this
case, the district court found that Snead's press release was motivated by ill will—a "malicious
intent to damage and halt the business operations of Defendants...." This plainly constitutes a
finding of express malice. Because Redland and Standard proved express malice, they have met
the requirement of proving common law malice.
   15
   Of course, the presumed damages must exceed a nominal amount to justify punitive
damages.
damages where no actual damages have been proven. Even if Doubleday so held, Leyendecker

implicitly overruled it. We also find Doubleday distinguishable. There, the jury awarded zero actual

damages and $200,000 in punitive damages. Where no actual damages or presumed damages are

awarded, the general Texas rule applies that no punitive damages are recoverable. If presumed

damages are awarded, they act as a substitute for actual damages, and punitive damages are

recoverable under Leyendecker. In summary, the cases are distinguishable because the jury awarded

presumed damages in Leyendecker but did not award any compensatory damages in Doubleday.

       The judgment is AFFIRMED in part, VACATED in part, and REMANDED.

                            Circuit Judge DUHÉ concurs in the result.