Wynn move shuts down publisher

Doreen Carvajal

Thursday, Oct. 9, 1997 | 10:11 a.m.

Mirage Resorts Chairman Steve Wynn, angered over a critical unauthorized biography, moved this week to collect on a defamation award of more than $3 million that could shut down a small New York publishing house that thrives on controversy.

The entire inventory of Barricade Books, a gadfly of a publishing house, was essentially frozen Tuesday at a Brooklyn warehouse after the warehouse owners received a restraining order from a Nevada court barring any distribution from the warehouse and demanding an accounting of the almost 400,000 volumes stored there.

"They're going to take everything I built and saved and worked for all my life," said the 75-year-old owner of Barricade Books, Lyle Stuart, who has begun to lay off employees at his Fifth Avenue offices in Manhattan. "I think the justice system has completely collapsed. There is none, not even the shadow of justice; there is no protection for me, no recourse."

The trade association for the publishing industry, the Association of American Publishers, said this was the first case of a book publisher being threatened with extinction because of a defamation lawsuit.

"I think it's quite Draconian," said Bruce Rich, a lawyer who represents the publishers' group on First Amendment issues. "It's unprecedented."

Independent publishers plan to get behind Stuart by filing a friend-of-the-court brief with the Nevada Supreme Court, said Judy Platt, director of an Association of American Publishers' committee that watches freedom of speech issues.

The committee discussed Stuart's situation at its Wednesday meeting in New York City, but didn't move to help him at this point, Platt said. Stuart is not a member of the association, she said.

"Had he been a member, we would have mobilized and offered whatever kind of support we could realistically offer," Platt said. "Believe me, we are really pulling for him."

She described the latest move to prevent Barricade Books from shipping books as "a dreadful situation."

"You can't prevent a publisher from shipping books and expect him to stay in business," Platt said. "It's frightening when a semi-public figure has the ability to shut down any kind of media in this way and drive him out of business. That's one way of trying to shut up a newspaper or a publisher: You slap them with a defamation suit. Fortunately, we have federal protection under the Constitution.

"There's nothing much we can do except wait. If there is a friend-of-the-court brief filed in the Nevada Supreme Court, there is a likelihood we will be on that brief. He didn't get a full and fair trial. There were issues of enormous concern in that trial."

Wynn's lead lawyer in the defamation case, Barry Langberg, insisted that his client was not seeking to force the seven-year-old Barricade Books out of business. "We'd be happy to work something out," Langberg said, adding of Stuart, "He's playing a game here; let's make arrangements so he can pay."

The dispute between Wynn and Stuart largely involves not the book itself but rather a catalog description of the biography, "Running Scared: The Life and Treacherous Times of Las Vegas Casino King Steve Wynn."

Written by Las Vegas Review-Journal columnist John Smith, the book was published in November 1995 after Wynn had already filed a lawsuit challenging the catalog description written by Stuart. The book sold fewer than 25,000 copies, and Smith received a modest advance of $7,500.

The catalog description, which featured a photo of Wynn beaming above a tiny spade and diamond, promised that the book would give the facts behind Wynn's rise to power in Nevada as the chairman of Mirage Resorts Inc.

The critical issue in the defamation lawsuit and an 11-day trial that ended in mid-August in Las Vegas was one sentence stating that the book "details why a confidential Scotland Yard report calls Wynn a front man for the Genovese crime family."

Wynn's lawyers argued that the Scotland Yard report was a foreign document created essentially for the political purpose of deterring any American, particularly Wynn, from obtaining a casino license in Britain.

The Nevada trial judge ruled in essence that the Scotland Yard report was an insufficient source for such information, because it was confidential and therefore did not fall under the common-law protection of the "fair report privilege," which allows publishers to be held blameless for any errors in a government report.

But several First Amendment legal experts predicted that Barricade Books probably could overturn the damage award on appeal because there are varying opinions in the courts about the fair use of foreign government reports.

"This is a very shaky decision," said Floyd Abrams, a lawyer who specializes in First Amendment issues. "He's not the first person to lose a lawsuit and go out of business. But if we do believe there's something special about books and speech, then it's all the more troubling to see a judgment of this sort that is vulnerable to appeal."

Stuart, who has been involved in publishing for more than 40 years, carried no libel insurance, and he says he cannot afford to post a bond to stave off the collection of the award while he pursues an appeal. Typically, insurance companies pay for such bonds as a matter of course, but Stuart said he had not bought insurance, because the yearly expense would have been anywhere from $25,000 to $100,000.

"Almost all publishers have libel insurance," said Victor Kovner, a lawyer who has represented other publishing houses on First Amendment issues. "This judgment is extremely vulnerable and likely to be overturned. But if you go bankrupt in the meantime, the issue is moot. That's one of the reasons that you buy libel insurance."

Stuart, however, has long been a contrarian in the publishing industry, selling books that other publishers scorned for their controversial nature. Two of his popular backlist titles are "The Anarchist Cookbook," a guide to making bombs, and "The Turner Diaries," a book describing a coming civil war that Timothy McVeigh is said to have read before the Oklahoma City bombing.

When the defamation trial ended in August, Wynn walked without comment from the courtroom, but later issued a statement lashing out at "Stuart's arrogance and unfeeling disregard for the consequences of their vicious statements." He closed by wishing that "today marked the simple end of the sad part of our lives, but it does not."

Wynn is pursuing another invasion-of-privacy and defamation lawsuit against Stuart and the author, Smith, in Kentucky, where, the publisher's lawyers contend, a total of two copies of the book were sold, one of them to their law firm.

"We're fighting over discovery right now," said Stuart's Kentucky lawyer, Don Cox. "They now want to go to Britain and depose some person in Scotland Yard."

SUN REPORTER Cathy Scott contributed to this report.