Big Man Bites Back

In a corruption trial four years ago, and now in his suit against Channel 8, Dan Peavy keeps winning.
Doug Milner

You can't really blame Dan Peavy if he gloats. For five years, the chuckles and the self-congratulating back pats have all been on the other side.

In 1996, when WFAA-Channel 8 investigative reporter Robert Riggs won the Peabody Award for a series of stories painting Peavy as a corrupt Dallas school board member, former Channel 8 news director John Miller told a Dallas Morning News reporter, "It's nice to win, you bet."

A year later, when a federal jury acquitted Peavy of all of the charges that had come out of the Riggs investigation, the Morning News did a story painting Peavy and co-defendant Eugene Oliver as having gotten away with it only because they wouldn't rat each other out.

The News headline, over the bylines of Alexei Barrionuevo and Pete Slover, said: "Defendants' loyalty in Peavy case foiled prosecution, observers say; Rejection of plea deals left government without witness."

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Now Peavy has in hand a long, scathing opinion from the U.S. Fifth Circuit Court of Appeals in New Orleans suggesting the only crooks in the Dan Peavy scenario may have been Miller, Riggs, Riggs' assistant, the company's outside lawyer, Paul Watler, and--most interestingly--unnamed upper management persons at the Belo Corporation, all of whom the court paints as conspirators in an illegal wiretapping operation.

In the Fifth Circuit opinion, some charges against Belo are stated as flat-out findings of the court: that Belo engaged in an illegal wiretap conspiracy, and that Riggs illegally disclosed the contents of illegal wiretaps to Belo personnel, law enforcement agencies, and lawyers. Some charges have been sent back to the district court in Dallas for trial, especially the question of whether Riggs' award-winning series on Peavy illegally disclosed contents of the wiretaps to a much larger audience.

The law allows the victim of an illegal wiretap to sue his attacker for damages.

The question of how widely Belo disseminated the contents of the tapes bears on how much money Peavy can collect.

Peavy is champing at the bit for a trial. "My attitude toward a trial is, bring it on!" Peavy said on the phone. "They don't have enough money. It's an issue of more than money. They basically destroyed my life as it was."

I called Riggs and his assistant, both of whom referred me to company lawyers. I called Miller. He didn't call back. Belo's outside lawyers, at Vinson & Elkins, referred me to David Star, corporate counsel for Belo. I called Watler, the former outside counsel who fares very poorly in the opinion, and Watler referred me to Belo corporate counsel as well. I called Belo corporate counsel, and they didn't call me back.

The Fifth Circuit's opinion was published July 31. The Morning News, which is owned by Belo, barely mentioned the opinion in a news digest inside the metro section.

The question in this case--and sometimes it's a more complicated one than it might appear on the surface--is whether the First Amendment gives reporters and news organizations the right to break the law. There are a lots of cases on the books in which the courts have said yes.

Reporters have broken many laws against publishing certain specific types of information. In most of those cases, the courts have ruled that the laws, whatever they were trying to suppress, were unconstitutional.

This is not that. This is about breaking a law that has nothing to do with the type of information involved. The law here is one that says you can't sneak into somebody's bedroom and record his conversation, no matter what he's talking about. This law is about theft and violation, not speech.

There are other similar cases working their way up to the Supreme Court in other parts of the country, all having to do with the recording of cellular or cordless phone conversations. The Fifth Circuit goes to some length in this opinion, however, to argue that this case is distinct from the others. The court says this is the only case in which a news organization took an active part in the wiretapping itself, knew that the wiretapping was illegal, and proceeded with the story anyway.

In a unanimous opinion brimming with colorful detail, the Fifth Circuit paints a fascinating picture of what unfolded within Channel 8 and Belo in 1996 while Riggs was preparing his stories about Dan Peavy and alleged insurance fraud within the Dallas school district. As a reporter myself, and as one who has sat through plenty of white-knuckled meetings with lawyers, I have to say that parts of this opinion were almost physically painful to read. It's difficult to imagine how any reporter could have been more poorly served by legal counsel and upper news management than Riggs seems to have been here.  

But then I have to remind myself: Riggs won the Peabody. Peavy's life was ruined.

This case goes back to December 1994, when Charles Harman, a neighbor of Peavy, started intercepting Peavy's cordless phone conversations on a radio scanner. Harman claimed later that he had checked with law enforcement officials, who had told him that cordless phone conversations were not covered by the federal wiretap law. The court found that Harman's claim was not true and that no law enforcement authority had told him he could tape cordless phone calls legally.

The sticky wicket here is that the law actually changed just a month and a half before Riggs first drove to Harman's house to hear his tapes of then-Dallas school board member Peavy. Previously, the wiretap law had not covered cordless phones, because there were no cordless phones when the law was written.

In October 1994, the law was amended to make it illegal for a third person to listen to and tape a wireless or cordless phone conversation without the knowledge of the people talking.

Harman told Riggs a great story. He said he had overheard Dan Peavy talking to people about all kinds of kickback schemes involving multimillion-dollar insurance contracts at the Dallas Independent School District. Peavy was chairman of the school board's insurance committee. Speaking in the privacy of his bedroom, Peavy peppered his conversation with racial epithets. Harman told Riggs he had been assured the tapes were legal.

What reporter could resist? Talk about a bird on the ground. Riggs, according to the court's opinion, took one of Harman's tapes with him that day but also gave Harman instructions on how to do the taping in the future. He told him not to turn the tape machine off and on during a conversation but just to let it run from beginning to end.

According to the opinion, Riggs eventually asked his superiors at Channel 8 if Harman was right about the legality of taping Peavy's calls.

Here is where things get smelly and where the overall culture and attitude of the corporation seem to come into play. According to the court, Watler, Belo's lawyer, told them wrong. He said the tapes were legal. He screwed up. He obviously didn't know the wiretap law had been amended.

Bad mistake. Who hasn't made a bad mistake? We're human.

Weeks later, Riggs hears from friends in law enforcement that cordless phone interceptions are now illegal. Riggs goes back to Belo. He tells them Watler must be wrong. Belo tells Watler to check. He does. He finds out he's wrong.

Watler comes back to Belo, according to the court, and tells them he screwed up. The tapes are illegal. Taking part in taping Peavy is a crime.

But Watler tells Belo that it's not really a problem, because the First Amendment "trumps" the wiretap act. In other words, there was no real screw-up. Everything's OK, because the First Amendment will exempt Riggs and Belo from the wiretap act.

Riggs and his assistant take most, but not all, of their tapes and transcripts back to Harman, but they continue to pursue leads they garnered from the tapes.

Wow. I have been privileged to work with really aggressive First Amendment lawyers whose whole thrust was to figure out how to get the story in the paper. Legally. But, in my poor layman's opinion, this seems like achingly thin ice. I have never heard a First Amendment lawyer say that reporters enjoy a special status which would allow them to break a law that has nothing to do with speech.

Another horribly bad-smelling piece of business happens at this juncture. After Riggs has learned that the Harman tapes are illegal, he starts secretly peddling the story to the ATF and the Dallas police, where he has connections, according to the opinion.

Dan Peavy tells me now he thinks he knows exactly why Riggs and Belo snitched on him. "They thought I would be in jail so far I would never be able to fight back," he says.

But Peavy beat the case. In fact, the only juror I have ever seen interviewed told reporters that the jury thought Peavy was a great guy.

The Fifth Circuit takes Belo's other big defense--that reporters are protected from wiretap charges by the First Amendment--and pretty much stomps it in a mud-hole.

And think about it. If wiretap material could be effectively laundered by handing it off to a reporter, thereby cloaking it after the fact in the First Amendment, nothing anybody ever said would be safe.

What distinguishes this case from two other similar cases elsewhere in the country is that this is the only one in which the person who made use of the content, Riggs, was also involved in the taping (giving Harman instructions). Belo knew all that. But somebody made a decision to keep walking this baby way out onto the ice anyway. I'm not covering for Riggs, whom I don't know well personally, but the other thing I can tell you from experience is that this kind of decision is not made by a reporter.  

Dan Peavy went through hell over this. A federal jury ruled he wasn't guilty of a crime. Now the appeals court is saying his primary accusers, Riggs and Belo, may have been. I'm sure if I were Peavy, I'd gloat. In fact, a little gloating seems like poor recompense.

Editor's note: In 1995, the Dallas Observer published a transcript of one conversation intercepted from Peavy's telephone in which he made blatantly racist remarks about blacks at DISD. Peavy sued the Observer for publishing the transcript, but that case was dismissed because the Observer played no role in making the tape of the conversation and obtained the transcript legally from DISD.

In addition, the Observer's parent company, New Times Inc., joined numerous other national media organizations in filing legal briefs in the Belo appeal in support of the argument that media organizations should not be held liable for publishing the truth, as long as no one in the news organization took part in a crime to get the information.

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