updated 6/1/2004 6:38:19 PM ET 2004-06-01T22:38:19

The Supreme Court refused Tuesday to consider a libel case that asked if business executives like those in recent corporate scandals are a type of “public figure” entitled to less privacy under the Constitution.

Justices rejected the appeal of a California newspaper which had been ordered to pay $2.25 million to a major stockholder in the now-defunct Santa Barbara Savings and Loan.

Beverly Hills businessman Leonard M. Ross accused the Santa Barbara News-Press of libeling him in 1988 and 1989 stories that said he was investigated by federal agencies. Ross claimed the stories improperly linked him to a former partner who was convicted of investor fraud.

A lower court said that Ross was a private figure, who had to prove only that the newspaper acted negligently to receive compensatory damages.

The newspaper argued that Ross, and other corporate leaders, should be considered public figures who in order to receive damages in libel lawsuits must show that journalists acted with actual malice in their reporting.

Kelli Sager, attorney for the newspaper, said the public benefits when reporters scrutinize prominent people. Business executives influence people’s lives, she told justices in a filing, in a way that makes them more than private citizens.

Attorney's 1st Amendment defense
“Now more than ever, this court should ensure that the First Amendment strikes the proper balance between protecting the media’s ability to publish such proactive stories and respecting businesspersons’ privacy in their personal lives,” she wrote.

Ross, an attorney in Beverly Hills who represented himself in the Supreme Court case, said the newspaper “would have this court homogenize the wide array of figures targeted by the media so as to provide it a perfect design to defame without liability.”

Ross was seeking regulatory approval to increase his stake in the savings and loan when a reporter spent three months researching him for a profile.

His case against the newspaper was tried twice in lower courts. The first time, Ross was awarded $7.5 million. That decision was thrown out, and he received a $2.25 million judgment at a second trial in 2001.

A filing on behalf of media groups, including newspapers and television networks, cited financial woes of Enron and WorldCom. “In the wake of such scandals, surely the press should be encouraged to play an active role in scrutinizing regulated industries and bringing to light the information that it learns,” their lawyers said

Ross filed a separate appeal, seeking to open up the newspaper to more damages. Justices turned that down as well.

The cases are Santa Barbara News-Press v. Ross, 03-1338, and Ross v. Santa Barbara News-Press, 03-1432.

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