On Monday, Jan. 27, 2014, the Supreme Court unanimously reversed a $1.2 million Colorado defamation verdict in the case of Air Wisconsin Airlines Corp. v. Hoeper—a notable decision for a court that rarely accepts libel cases. The Court interpreted an immunity provision of the Aviation and Transportation Security Act (ATSA) but it had much to say about the proper application of the actual malice standard set forth in New York Times Co. v. Sullivan, 376 U.S. 254 (1964).

In an opinion written by Justice Sonia Sotomayor, the Court found that the ATSA immunity provision was patterned after the New York Times actual malice standard, under which a plaintiff must show that the statements at issue are false to prevail in a defamation action. The Court reiterated that actual malice requires that the falsity must be "material," such that minor inaccuracies are not sufficient to support a claim where the report is substantially true. The actual malice standard does not cover materially true statements, even if made recklessly.

Although the Court was unanimous in reversing the decision below, Justice Antonin Scalia, joined by Justices Clarence Thomas and Elena Kagan, would have remanded the case to allow the jury to determine whether the statements at issue were materially false. Justice Sotomayor's opinion for the Court, however, applied the actual malice standard to the facts and found that the defamation claim failed as a matter of law.

The immunity provision of the ATSA at issue was passed by Congress in the wake of the September 11 attacks. Based on the adage "if you see something, say something," the law provides immunity from civil liability for airlines and their employees for reporting suspicious behavior to the Transportation Security Administration (TSA). Immunity is lost only where a disclosure is made "with actual knowledge that the disclosure was false, inaccurate or misleading" or "with reckless disregard as to the truth or falsity of that disclosure." The exception was explicitly patterned after the New York Times actual malice standard.

The case arose when Air Wisconsin airline employees reported their concerns to the TSA about a disgruntled employee—William Hoeper, an Air Wisconsin pilot—who had an angry outburst after failing a proficiency test for a new model of aircraft; knew that his termination was imminent after failing that test; was authorized to carry a firearm on board an aircraft as a Federal Flight Deck Officer (FFDO); and was about to board a commercial flight. The TSA responded to this report by removing Hoeper from the plane, searching and questioning him.

Hoeper sued for defamation and the trial court rejected Air Wisconsin's ATSA immunity defense. The court found that immunity was a question for the jury, which ultimately found for Hoeper, awarding compensatory and punitive damages. Both the Colorado Court of Appeals and Supreme Court affirmed. Although the state Supreme Court held that ATSA immunity was a question of law for the court and not the jury to decide, it found the error was harmless because the record supported the jury's finding of reckless disregard for the truth. In coming to that conclusion, the Colorado Supreme Court stated—in a footnote that the U.S. Supreme Court declared was "key"—that it "need not, and therefore do[es] not, decide whether the statements were true or false."

The U.S. Supreme Court granted certiorari to address whether ATSA immunity can be denied without deciding whether the report is true. It held that congressional adoption of the New York Times standard necessarily incorporated case law interpreting actual malice to require a finding of material falsity.

The decision also addressed the broader issue of the scope of appellate review, which went beyond the specific question accepted for review. In a single sentence that arguably resolved a circuit split over the appropriate standard for review of a jury finding of falsity, the Court emphasized that where the issue on appeal is a matter of law—as the immunity determination was found to be—a reviewing court's deferential review of jury findings "cannot substitute" for its own independent review of the record.

Justice Sotomayor's opinion for the Court went on to explain why the airline's statements were not materially false: the difference between what the airline said and a more technically precise choice of words would have had no appreciable effect on a reasonable TSA officer's actions. In so doing, the Court reiterated that it is enough for a statement to convey the accurate "gist," regardless of whether "trained lawyers or judges might with the luxury of time have chosen more precise words." Justice Scalia's separate opinion would have left the question of material falsity for the jury on remand.

The Court's meticulous dissection of substantial truth provides a helpful guide for future cases, and it reiterates the importance of taking one's audience into account when determining what is "materially" false. And although this case arose in the context of airline security, its reasoning should prove particularly useful in other speech cases where time is of the essence, such as fast-breaking news and emergency reporting.

Davis Wright Tremaine filed an amicus brief in the case on behalf of the Reporters Committee for Freedom of the Press and a coalition of media organizations.