Judge Dumps Most of Libel Verdict Against Dow Jones

NEW YORK — A federal judge in Houston on Friday threw out most of a $222.7-million libel verdict against Dow Jones & Co., a record amount that stunned the newspaper industry and free-press advocates.

The ruling by Judge Ewing Werlein eliminated $200 million in punitive damages awarded to the Houston investment firm of MMAR Group Inc. Actual damages of $22.7 million still stand against Dow Jones, which publishes the Wall Street Journal. But Dow Jones spokesman Richard Tofel said the company would seek to reduce that amount.

“We are gratified that the court took a substantial first step in reducing the damages that the jury sought to impose upon Dow Jones and the Wall Street Journal by eliminating the punitive award against Dow Jones,” Tofel said.

There was no immediate comment from MMAR attorney Kenneth Morris.

First Amendment attorneys welcomed the decision, calling the original amount an astonishing sum and the latest in a series of large libel judgments against the news media.

“It’s not surprising that the court has thrown it out today,” said Floyd Abrams, a prominent lawyer who has represented major news organizations in 1st Amendment legal brawls. “Had this judgment remained in effect, it would have chilled all reporting by all newspapers.”

The ruling came two months after a seven-member jury decided that five sentences in a Journal article by Laura Jereski published Oct. 21, 1993, were false and defamatory against MMAR.

Lawyers for MMAR blamed the article for the investment firm’s demise later that year. Dow Jones argued during the two-week trial that the firm collapsed for other reasons and that the disputed sentences were accurate or substantially true.

Even with the vastly reduced amount in the Dow Jones case, the $22.7-million figure, if affirmed by the courts, would be the largest ever allowed to stand, Abrams said.