Dun & Bradstreet,Inc.v.Greenmoss Builders
Supreme Court of the United States,1985
472 U.S.749
[Petitioner credit reporting agency sent a report to five subscribers indicating that respondent construction contractor had filed a voluntary petition for bankruptcy.The report was false,and grossly misrepresented respondent’s assets and liabilities.Thereafter,petitioner issued a corrective notice,but respondent was dissatisfied with this notice and brought a defamation action in Vermont state court,alleging that the false report had injured its reputation and seeking damages.After trial,the jury returned a verdict in respondent’s favor and awarded both compensatory or presumed damages and punitive damages.But the trial court believed that Gertz v.Robert Welch,Inc.,418 U.S.323,controlled,and granted petitioner’s motion for a new trial on the ground that the instructions to the jury permitted it to award damages on a lesser showing than “actual malice.”The Vermont Supreme Court reversed,holding that Gertz was inapplicable to nonmedia defamation actions.]
POWELL,J.,delivered an opinion.
In Gertz v.Robert Welch,Inc.,418 U.S.323 (1974),we held that the First Amen-d ment restricted the damages that a private individual could obtain from a publisher for a libel that involved a matter of public concern.More specifically,we held that in these circumstances the First Amendment prohibited awards of presumed and punitive damages for false and defamatory statements unless the plaintiff shows “actual malice,” that is,knowledge of falsity or reckless disregard for the truth.The question presented in this case is whether this rule of Gertz applies when the false and defamatory statements do not involve matters of public concern.
I
Petitioner Dun & Bradstreet,a credit reporting agency,provides subscribers with financial and related information about businesses.All the information is confidential;under the terms of the subscription agreement the subscribers may not reveal it to anyone else.On July 26,1976,petitioner sent a report to five subscribers indicating that respondent,a construction contractor,had filed a voluntary petition for bankruptcy.This report was false and grossly misrepresented respondent’s assets and liabilities.That same day,while discussing the possibility of future financing with its bank,respondent’s president was told that the bank had received the defamatory report.He immediately called petitioner’s regional office,explained the error,and asked for a correction.In addition,he requested the names of the firms that had received the false report in order to assure them that the company was solvent.Petitioner promised to look into the matter,but refused to divulge the names of those who had received the report.
After determining that its report was indeed false,petitioner issued a corrective notice on or about August 3,1976,to the five subscribers who had received the initial report.The notice stated that one of respondent’s former employees,not respondent itself,had filed for bankruptcy,and that respondent “continued in business as usual.” Respondent told petitioner that it was dissatisfied with the notice,and it again asked for a list of subscribers who had seen the initial report.Again petitioner refused to divulge their names.
Respondent then brought this defamation action in Vermont state court.It alleged that the false report had injured its reputation and sought both compensatory and punitive damages.The trial established that the error in petitioner’s report had been caused when one of its employees,a 17-year-old high school student paid to review Vermont bankruptcy pleadings,had inadvertently attributed to respondent a bankruptcy petition filed by one of respondent’s former employees.Although petitioner’s representative testified that it was routine practice to check the accuracy of such reports with the businesses themselves,it did not try to verify the information about respondent before reporting it.
After trial,the jury returned a verdict in favor of respondent and awarded$50,000 in compensatory or presumed damages and $300,000 in punitive damages.Petitioner moved for a new trial.It argued that,in Gertz v.Robert Welch,Inc.this Court had ruled [against recovery not based on actual damage],and argued that the judge’s instructions in this case permitted the jury to award such damages on a lesser showing.The trial court indicated some doubt as to whether Gertz applied to “non-media cases,” but granted a new trial “[b]ecause of … dissatisfaction with its charge and … conviction that the interests of justice require[d]” it.
The Vermont Supreme Court reversed.Although recognizing that “in certain instances,the distinction between media and nonmedia defendants may be difficult to draw,” ….Relying on this distinguishing characteristic of credit reporting firms,the court concluded that such firms are not “the type of media worthy of First Amendment protection as contemplated by New York Times and its progeny.” It held that the balance between a private plaintiff’s right to recover presumed and punitive damages without a showing of special fault and the First Amendment rights of “nonmedia” speakers “must be struck in favor of the private plaintiff defamed by a nonmedia defendant.” Accordingly,the court held “that as a matter of federal constitutional law,the media protections outlined in Gertz are inapplicable to nonmedia defamation actions.”
II
As an initial matter,respondent contends that we need not determine whether Gertz applies in this case because the instructions,taken as a whole,required the jury to find “actual malice” before awarding presumed or punitive damages.The trial cour t instructed the jury that,because the report was libelous per se,respondent was not required “to prove actual damages … since damage and loss [are] conclusively presumed.” It also instructed the jury that it could award punitive damages only if it found “actual malice.” Its only other relevant instruction was that liability could not be established unless respondent showed “malice or lack of good faith on the part of the Defendant.” Respondent contends that these references to “malice,” “lack of good faith,” and “actual malice” required the jury to find knowledge of falsity or reckless disregard for the truth – the “actual malice” of New York Times Co.v.Sullivan – before it awarded presumed or punitive damages.
We reject this claim because the trial court failed to define any of these terms adequately.It did not,for example,provide the jury with any definition of the term“actual malice.” In fact,the only relevant term it defined was simple “malice.” And its definitions of this term included not only the New York Times formulation but also other concepts such as “bad faith” and “reckless disregard of the [statement’s] possible consequences.” The instructions thus permitted the jury to award presumed and punitive damages on a lesser showing than “actual malice.” Consequently,the trial court’s conclusion that the instructions did not satisfy Gertz was correct,and the Vermont Supreme Court’s determination that Gertz was inapplicable was necessary to its decision that the trial court erred in granting the motion for a new trial.We therefore must consider whether Gertz applies to the case before us.
III
In New York Times Co.v.Sullivan,the Court for the first time held that the First Amendment limits the reach of state defamation laws.That case concerned a public official’s recovery of damages for the publication of an advertisement criticizing police conduct in a civil rights demonstration.As the Court noted,the advertisement concerned “one of the major public issues of our time.” Noting that “freedom of expression upon public questions is secured by the First Amendment,” and that “debate on public issues should be uninhibited,robust,and wide-open,” the Court held that a public official cannot recover damages for defamatory falsehood unless he proves that the false statement was made with “‘actual malice’ – that is,with knowledge that it was false or with reckless disregard of whether it was false or not.” In later cases,all involving public issues,the Court extended this same constitutional protection to libels of public figures,e.g.,Curtis Publishing Co.v.Butts,(1967),and in one case suggested in a plurality opinion that this constitutional rule should extend to libels of any individual so long as the defamatory statements involved a “matter of public or general interest,” Rosenbloom v.Metromedia,Inc.,(1971).
In Gertz,we held that the protections of New York Times did not extend as far as Rosenbloom suggested.Gertz concerned a libelous article appearing in a magazine called American Opinion,the monthly outlet of the John Birch Society.The article in question discussed whether the prosecution of a policeman in Chicago was part of a Communist campaign to discredit local law enforcement agencies.The plaintiff,Gertz,neither a public official nor a public figure,was a lawyer tangentially involved in the prosecution.The magazine alleged that he was the chief architect of the “frame-up” of the police officer and linked him to Communist activity.Like every other case in which this Court has found constitutional limits to state defamation laws,Gertz involved expression on a matter of undoubted public concern.
In Gertz,we held that the fact that expression concerned a public issue did not by itself entitle the libel defendant to the constitutional protections of New York Times.These protections,we found,were not “justified solely by reference to the interest of the press and broadcast media in immunity from liability.” Rather,they represented “an accommodation between [First Amendment] concern[s] and the limited state interest present in the context of libel actions brought by public persons.” In libel actions brought by private persons we found the competing interests different.Largely because private persons have not voluntarily exposed themselves to increased risk of injury from defamatory statements and because they generally lack effective opportunities for rebutting such statements,we found that the State possessed a “strong and legitimate … interest in compensating private individuals for injury to reputation.” Balancing this stronger state interest against the same First Amendment interest at stake in New York Times,we held that a State could not allow recovery of presumed and punitive damages absent a showing of “actual malice.” Nothing in our opinion,however,indicated that this same balance would be struck regardless of the type of speech involved.
IV
We have never considered whether the Gertz balance obtains when the defamatory statements involve no issue of public concern.To make this determination,we must employ the approach approved in Gertz and balance the State’s interest in compensating private individuals for injury to their reputation against the First Amendment interest in protecting this type of expression….(https://www.daowen.com)
The First Amendment interest,on the other hand,is less important than the one weighed in Gertz.We have long recognized that not all speech is of equal First Amendment importance….
While such speech is not totally unprotected by the First Amendment,its protections are less stringent.In Gertz,we found that the state interest in awarding presumed and punitive damages was not “substantial” in view of their effect on speech at the core of First Amendment concern.This interest,however,is “substantial” relative to the incidental effect these remedies may have on speech of significantly less constitutional interest….
As a result,courts for centuries have allowed juries to presume that some damage occurred from many defamatory utterances and publications.This rule furthers the state interest in providing remedies for defamation by ensuring that those remedies are effective.In light of the reduced constitutional value of speech involving no matters of public concern,we hold that the state interest adequately supports awards of presumed and punitive damages – even absent a showing of “actual malice.”
V
The only remaining issue is whether petitioner’s credit report involved a matter of public concern.
… This particular interest warrants no special protection when – as in this case the speech is wholly false and clearly damaging to the victim’s business reputation.Moreover,since the credit report was made available to only five subscribers,who,under the terms of the subscription agreement,could not disseminate it further,it cannot be said that the report involves any “strong interest in the free flow of commercial information.” There is simply no credible argument that this type of credit reporting requires special protection to ensure that “debate on public issues [will] be uninhibited,robust,and wide-open.”
In addition,the speech here,like advertising,is hardy and unlikely to be deterred by incidental state regulation.It is solely motivated by the desire for profit,which,we have noted,is a force less likely to be deterred than others.Arguably,the reporting here was also more objectively verifiable than speech deserving of greater protection.In any case,the market provides a powerful incentive to a credit reporting agency to be accurate,since false credit reporting is of no use to creditors.Thus,any incremental “chilling” effect of libel suits would be of decreased significance.
VI
We conclude that permitting recovery of presumed and punitive damages in defamation cases absent a showing of “actual malice” does not violate the First Amendment when the defamatory statements do not involve matters of public concern.Accordingly,we affirm the judgment of the Vermont Supreme Court.
It is so ordered.
[1]A copy of the advertisement is reproduced at the end of the case.
[2]Respondent did not consider the charge of expelling the students to be applicable to him,since“that responsibility rests with the State Department of Education.”
[3]Approximately 394 copies of the edition of the Times containing the advertisement were circulated in Alabama.Of these,about 35 copies were distributed in Montgomery County.The total circulation of the Times for that day was approximately 650,000 copies.
[4]Even a false statement may be deemed to make a valuable contribution to public debate,since it brings about “the clearer perception and livelier impression of truth,produced by its collision with error.” Mill,On Liberty (Oxford: Blackwell,1947),at 15;see also Milton,Areopagitica,in Prose Works (Yale,1959),Vol.II,at 561.
[5]The privilege immunizing honest misstatements of fact is often referred to as a “conditional” priv-i lege to distinguish it from the “absolute” privilege recognized in judicial,legislative,administrative and executive proceedings.See,e.g.,Prosser,Torts (2d ed.,1955),s 95.
[6]We have no occasion here to determine how far down into the lower ranks of government employees the “public official” designation would extend for purposes of this rule,or otherwise to specify categories of persons who would or would not be included.Nor need we here determine the boundaries of the “official conduct” concept.It is enough for the present case that respondent’s position as an elected city commissioner clearly made him a public official,and that the allegations in the advertisement concerned what was allegedly his official conduct as Commissioner in charge of the Police Department.As to the statements alleging the assaulting of Dr.King and the bombing of his home,it is immaterial that they might not be considered to involve respondent’s official conduct if he himself had been accused of perpetrating the assault and the bombing.Respondent does not claim that the statements charged him personally with these acts;his contention is that the advertisement connects him with them only in his official capacity as the Commissioner supervising the police,on the theory that the police might be equated with the “They”who did the bombing and assaulting.Thus,if these allegations can be read as referring to respondent at al l,they must be read as describing his performance of his official duties.
[7]The Times has set forth in a booklet its “Advertising Acceptability Standards.” Listed among the classe s of advertising that the newspaper does not accept are advertisements that are “fraudulent or deceptive,”that are “ambiguous in wording and … may mislead,” and that contain “attacks of a personal character.”In replying to respondent’s interrogatories before the trial,the Secretary of the Times stated that “as the advertisement made no attacks of a personal character upon any individual and otherwise met the adverti-s ing acceptability standards promulgated,” it had been approved for publication.
[8]Respondent’s own testimony was that “as Commissioner of Public Affairs it is part of my duty to supervise the Police Department and I certainly feel life it (a statement) is associated with me when it describes police activities.” He thought that “by virtue of being Police Commissioner and Commissioner of Public Affairs,” he was charged with “any activity on the part of the Police Department.”“When it describes police action,certainly I feel it reflects on me as an individual.” He added that “It is my feeling that it reflects not only on me but on the other Commissioners and the community.”
[9]Insofar as the proposition means only that the statements about police conduct libeled respondent by implicitly criticizing his ability to run the Police Department,recovery is also precluded in this case by the doctrine of fair comment.Since the Fourteenth Amendment requires recognition of the conditional privilege for honest misstatements of fact,it follows that a defense of fair comment must be afforded for honest expression of opinion based upon privileged,as well as true,statements of fact.Both defenses are of course defeasible if the public official proves actual malice,as was not done here.