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October 1, 1981


The opinion of the court was delivered by: Kocoras, District Judge:


The plaintiff, James R. Cantrell, filed this action to recover actual and punitive damages from American Broadcasting Companies, Inc. and from two of ABC's employees, Geraldo Rivera and Peter Lance. The complaint alleges that the plaintiff suffered injury to his reputation because of a nationally televised broadcast on February 7, 1980 of ABC's program entitled "Newsmagazine 20/20." The segment at issue was entitled "Arson and Profit," which was narrated by Mr. Rivera and produced by Mr. Lance. Both Rivera and Lance were investigative reporters who took part in the preparation of the segment. Defendants move to dismiss the complaint pursuant to Rule 12(b)(6), F.R.Civ.P., on the ground that it fails to state a cause of action for libel and for invasion of privacy. This court has reviewed both a transcript and a videotape of the broadcast.

The 20/20 segment on "Arson and Profit" concerned an investigation of an alleged arson-for-profit conspiracy involving a group of real estate owners and their associates who operated in the Uptown neighborhood of Chicago, Illinois. In the first minute of the program, an announcer states that in many cases arson causes some people to get rich while others lose their homes or lives. He then declares that "20/20's hidden camera shows you the tricks of the trade."

After the introduction to the program is given by Mr. Hugh Downs, Geraldo Rivera delivers his opening paragraph:

  Because it's so difficult to catch someone in the
  act of actually trying to set fire to a building,
  the courts allow circumstantial evidence to prove
  who committed the crime. Well, in this
  investigation by 20/20 and Chicago's Better
  Government Association, we believe we've
  uncovered some extraordinary circumstantial
  evidence. Evidence that a small group of Uptown
  Chicago businessmen are making money as their
  buildings burn and as their tenants die. This is
  a report on "Arson and Profit."

Mr. Rivera then reviews a fire in the Uptown community which had apparently been caused by an arsonist seeking revenge on a tenant. (Tr. 3). Immediately afterwards, Rivera states that there is another type of intentional fire caused by arson for profit, which is "what the rest of the report is all about." (Tr. 3).

Rivera reported that ABC News began to investigate "this group of building owners and their associates" in November of 1979. (Tr. 6). Producer Peter Lance posed as a real estate developer and had "more than ten meetings with these men" over the next two months. Two men, who are shown walking together outdoors, are identified as "the two principal members of the group." (Tr. 6). One of them is "John Schmiegal, owner of several transient hotels"; the other is "Charles Roberts, a notorious Uptown slum lord." (Tr. 6). Shortly after they are shown, Rivera reports:

  While Roberts and Schmiegal are the main
  characters in this story, they haven't acted
  alone. There is also a supporting cast.
  [A view of Cedar Realty's office is then shown on
  the screen.]
  This is Cedar Realty, a brokerage firm which
  lists a number of Uptown Chicago properties. The
  principal broker at Cedar is Albert LaBunski.
  (Tr. 6).

After other parties are shown, including the agent who allegedly wrote the insurance policies for the Roberts group, Rivera asks the viewing audience to consider "Exhibit A", which is the Ellis Hotel. (Tr. 7). Two people died in a four alarm fire in that building on February 19, 1979. That was the sixth fire in the hotel since the Roberts group had taken control of it in 1968. According to Rivera, a check was issued in the amount of $145,000 for the Ellis Hotel fire to John Schmiegal, his wife, and Charles Roberts "among others." (Tr. 8). That insurance payment was allegedly the twenty eighth received by Schmiegal and associates in the last six years. (Tr. 8).

Having reviewed two other cases of fire in buildings owned by the Roberts group, Rivera discussed the fire on December 29, 1979 which killed seven people in the Malden Park Apartments. (Tr. 9). Specifically, Rivera stated:

  According to first reports, the fire was caused
  by a tenant cooking in his room. But ABC News
  assembled a special fire investigation team to
  pinpoint the actual cause of the blaze.
  What the fire investigation team uncovered is
  sharply different from the original police
  findings. You'll learn what we learned about the
  fire that left seven people dead, and about the
  people who may have been responsible when this
  Special 20/20 Report continues after this: (Tr.

After the commercial break, Rivera described the Malden Park Apartments fire in detail and noted that it was another building owned by "Charles Roberts and his associates." At this point in the program, the plaintiff was mentioned for the first time:

  James Cantrell is an employee of Cedar Realty,
  and he's no stranger to fires in Uptown. He
  worked at the Ellis Hotel just before it burned
  last year, and was the manager of the Malden Park
  Apartments when the fire broke out in December.
  At the time Cantrell blamed the fire on a
  resident cooking in his fourth floor room. (Tr.

James Cantrell was then shown on the screen and asked about the cause of the fire. He said that the tenant had three pots on the stove and that the burners were "turned wide open." (Tr. 10). Rivera immediately inquired:

  Was it an accidental fire caused by a careless
  tenant cooking, as James Cantrell, the building
  manager contends? Or was this a case of arson?
  (Tr. 10).

Larry Schreiner, a fire inspector, was interviewed and stated that in his opinion the fire started below the fourth floor. Mr. Schreiner was shown inspecting the rear stairwell of the building.

Rivera reported that ABC News had samples of the stair beams tested at Pan-Tecnick Laboratories. The results of the tests indicated that the wood stair beams contained gasoline. At this point, Rivera stated:

  Let's review. Our evidence concludes that the
  fire was started by gasoline in the lower rear
  stairwell. But building manager Cantrell
  continues to insist that it was caused by a
  fourth-floor cooking accident. And as the
  conversation you're about to witness indicates,
  James Cantrell apparently views himself as an
  expert when it comes to apartment building fires.
  In fact two weeks before the fatal Malden fire,
  he [plaintiff] met with 20/20 Producer Peter
  Lance, who was continuing in his undercover role
  as a real estate developer. We filmed their
  conversation from this van, using one-way glass
  and a hidden camera. During the course of the
  conversation Cantrell actually instructed Lance
  on how to get the most insurance money from an
  arson fire. He told Lance it was good to have a
  basement fire because that way you can collect
  for smoke damage for the entire building. But he
  went on to say that a fire on the top floor is
  even better because then you get paid for water
  damage as well. (Tr. 11).

During the foregoing narration, the plaintiff was shown walking to a car with Lance, getting into the car, and then speaking to Lance inside the car.

As soon as Rivera had described the conversation between Lance and Cantrell, Rivera and Lance were filmed in the following interview with the plaintiff:

On January 9th, we confronted Mr. Cantrell:

  RIVERA: See this man right here. [referring to

CANTRELL: Yes sir.

  RIVERA: Do you recall any conversation with him
  concerning how to set fires, ...

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