Snead v. Redland Aggregates Ltd. ( 1993 )

  •                                   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,
    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:
           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
        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
             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
             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.
             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
             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.
              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
              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
           We use Snead's name to refer to the arguments raised by both Snead and Georgetown.
        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
        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.).
        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
    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
            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
       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.
            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.
    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
        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
            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
            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
            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
    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.
            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.
        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
        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.
          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.
         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
             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.
            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.
    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
        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
        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
            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.
         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.
       Of course, the presumed damages must exceed a nominal amount to justify punitive
    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.