425 F.Supp. 814 (N.D.Cal. 1977), C-75-1166, Trans World Accounts, Inc. v. Associated Press

Docket Nº:C-75-1166 WWS.
Citation:425 F.Supp. 814
Party Name:TRANS WORLD ACCOUNTS, INC., a California Corporation, Plaintiff, v. The ASSOCIATED PRESS et al., Defendants.
Case Date:January 31, 1977
Court:United States District Courts, 9th Circuit, Northern District of California

Page 814

425 F.Supp. 814 (N.D.Cal. 1977)

TRANS WORLD ACCOUNTS, INC., a California Corporation, Plaintiff,

v.

The ASSOCIATED PRESS et al., Defendants.

No. C-75-1166 WWS.

United States District Court, N.D. California.

Jan. 31, 1977

Page 815

[Copyrighted Material Omitted]

Page 816

L. Lawrence Bernheim, Spridgen, Barrett, Achor, Luckhardt, Anderson & James, Santa Rosa, Cal., for plaintiff.

Page 817

David E. Monahan, Gray, Cary, Ames & Frye, San Diego, Cal., for defendant Copley Press, Inc.

Rogers & Wells by Richard N. Winfield and Donald F. Luke, New York City, for Associated Press.

Baker, Hostetler & Patterson, by Bruce W. Sanford and Lawrence V. Lindberg, Cleveland, Ohio for United Press International.

Arthur B. Dunne, Robert M. Dunne, Dunne, Phelps & Mills, San Francisco, Cal., for defendants Associated Press and United Press International, Inc.

ORDER GRANTING AND DENYING MOTIONS FOR SUMMARY JUDGMENT

SCHWARZER, District Judge.

This is an action for defamation arising out of erroneous reports published by defendants of a complaint against plaintiff proposed to be issued by the Federal Trade Commission (FTC). Plaintiff Trans World Accounts, Inc. is a corporation conducting debt collecting and other operations in California and elsewhere. On January 3, 1975, the FTC distributed a press release announcing that it intended to issue complaints against Trans World and seven other debt collecting companies charging certain unfair and deceptive practices, namely (1) the use of collection forms appearing to be urgent telegraphic messages, (2) the use of forms falsely stating that legal action was about to be instituted, (3) the use of letters threatening debtors with damage to their credit ratings unless bills were promptly paid, and (4) falsely holding themselves out as bona fide collection agencies when in fact the companies were only mailing services engaged in sending out form messages to debtors.

The FTC release indicated that the third and fourth of the above charges were not being made against plaintiff Trans World, but only against certain of the other proposed respondents. The relevant portion of the press release stated:

"With the exception of Continental Collection Service and Trans World Accounts, Inc., all of the complaints allege that, contrary to fact, respondents represented that the debtor's general credit record would be adversely affected if the alleged debt is not paid.

Other typical allegations in the proposed complaints, with the exception of Power's Service, Inc., and Trans World Accounts, Inc., are that, contrary to representation:

. . . proposed respondents' businesses are not collection agencies, and

. . . alleged delinquent debts are not referred by creditors for collection by proposed respondents."

Nevertheless, one of three different dispatches prepared by the Washington Bureau of Associated Press (AP) reporting the FTC press release failed to indicate that not all of the eight companies named in the proposed complaints were charged with all of the unfair conduct described in the dispatch. Similarly the dispatch prepared by United Press International (UPI) reporting the press release failed to distinguish between the charges against Trans World and those against the other companies.

The San Diego Union and the San Diego Evening Tribune, both owned by Copley Press Inc., published news stories based on the AP and UPI dispatches in which Trans World was lumped with the other companies as the object of all of the charges in the proposed complaint.

Plaintiff demanded that AP and UPI publish corrections. Both wire services did so, but AP's correction was untimely under the California correction statute, Cal.Civil Code s 48a. Trans World also demanded a correction from the newspapers. The San Diego Union published a correction within the statutory time limit; The Evening Tribune's correction was untimely.

On May 6, 1975, Trans World filed an action for libel in the San Francisco Superior Court against AP, UPI and Copley Press, seeking general, special and punitive damages. It was subsequently removed to this Court which has jurisdiction based on diversity of citizenship. The defendants have now moved for summary judgment.

Page 818

I.

California law defines libel as a false and unprivileged publication which exposes a person to contempt, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation. Cal.Civil Code s 45. The protection afforded by California libel law extends to corporations as well as to individuals. A corporation may recover for defamatory statements having "a tendency to directly affect (its) property . . . or occasion it pecuniary injury." Western Broadcast Co. v. The Times-Mirror Co., 14 Cal.App.2d 120, 57 P.2d 977 (1936); Daniels v. Sanitarium Assoc., Inc., 59 Cal.2d 602, 30 Cal.Rptr. 828, 833, 381 P.2d 652 (1963); Di Giorgio Fruit Corp. v. American Federation of Labor, 215 Cal.App.2d 560, 30 Cal.Rptr. 350 (1963). The Restatement of Torts states the applicable rule as follows:

"One who falsely, and without a privilege to do so, publishes of a corporation for profit matter which tends to prejudice it in the conduct of its trade or business or to deter third persons from dealing with it, is liable to the corporation . . ." Sec. 561.

California law provides that statements made in the proper discharge of an official duty, in the course of official proceedings or in fair and true reports in a public journal of such proceedings or of public meetings are absolutely privileged. Communications between persons having an interest in the subject made without malice are also privileged. But other libelous communications subject the persons making the publication to liability without regard to fault. A plaintiff, whether a natural person or a corporation, may recover general, special and exemplary damages, except that in cases against newspapers only special damages may be recovered if a correction is demanded and published within the time provided. Cal.Civil Code, ss 47, 48a. In view of the disposition of this case, it is not necessary to decide whether the correction provisions apply to AP and UPI.

Inasmuch as the publication here was one which may be found to be defamatory and which does not fall within any of the privileges recognized by California law, Trans World has stated a claim for libel upon which defendants could be held liable at least for special damages and, in the case of The Evening Tribune and AP, for general and exemplary damages.

II.

Until the decision in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), libelous publications were considered to be "a class of speech wholly unprotected by the First Amendment . . ." Gertz v. Robert Welch, Inc., 418 U.S. 323, 370, 94 S.Ct. 2997, 3022, 41 L.Ed.2d 789 (1974). In New York Times, the Court began the process of reconciling the interest in reputation with the interest in free speech by holding that "the Constitution delimits a State's power to award damages for libel in actions brought by public officials against critics of their official conduct." 376 U.S. at 283, 84 S.Ct. at 727. In such cases, the Court held, the First Amendment bars recovery except where the statement is found to have...

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19 practice notes
  • 88 Cal.App.3d 95, Civ. 42363, Vegod Corp. v. American Broadcasting Companies, Inc.
    • United States
    • California California Court of Appeals
    • January 8, 1979
    ...York Times test." (418 U.S., pp. 337-339, 94 S.Ct. p. 3006; and see Trans World Accounts, Inc. v. Associated Press (N.D.Cal.1977) 425 F.Supp. 814, 818-819; Rosanova v. Playboy Enterprises, Inc., supra, 411 F.Supp. 440, 443.) Vegod's only contention on its appeal is expressed in this ma......
  • 656 P.2d 896 (N.M.App. 1982), 5530, Coronado Credit Union v. Koat Television, Inc.
    • United States
    • New Mexico Court of Appeals of New Mexico
    • November 18, 1982
    ...has been defamed by a false imputation about its financial soundness or business ethics. Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 (N.D.Cal.1977); Golden Palace Inc. v. National Broadcasting Co., Inc., 386 F.Supp. 107 (D.D.C.1974) aff'd 530 F.2d 1094 (D.C.Cir.1976); se......
  • 481 F.Supp. 919 (N.D.Iowa 1978), C 76-3048, Littlefield v. Fort Dodge Messenger
    • United States
    • Federal Cases United States District Courts 8th Circuit
    • December 29, 1978
    ...Inc., 429 F.Supp. 167 (D.D.C.1977), Affirmed 188 U.S.App.D.C. 185, 578 F.2d 427 (1978); Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 Page 923 Rosanova v. Playboy Enterprises, Inc., 411 F.Supp. 440 (S.D.Ga.1976); Donaldson v. Washington Post Company, Civil Action No. 2331-......
  • 367 N.W.2d 476 (Minn. 1985), C5-82-1519, Jadwin v. Minneapolis Star and Tribune Co.
    • United States
    • Minnesota Supreme Court of Minnesota
    • May 3, 1985
    ...Benefit Life Insurance, 375 So.2d at 240 (investigation by state insurance department); Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 (N.D.Cal.1977) (proposed administrative complaint by the FTC against These cases reflect the increasing importance attached by the United S......
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19 cases
  • 88 Cal.App.3d 95, Civ. 42363, Vegod Corp. v. American Broadcasting Companies, Inc.
    • United States
    • California California Court of Appeals
    • January 8, 1979
    ...York Times test." (418 U.S., pp. 337-339, 94 S.Ct. p. 3006; and see Trans World Accounts, Inc. v. Associated Press (N.D.Cal.1977) 425 F.Supp. 814, 818-819; Rosanova v. Playboy Enterprises, Inc., supra, 411 F.Supp. 440, 443.) Vegod's only contention on its appeal is expressed in this ma......
  • 656 P.2d 896 (N.M.App. 1982), 5530, Coronado Credit Union v. Koat Television, Inc.
    • United States
    • New Mexico Court of Appeals of New Mexico
    • November 18, 1982
    ...has been defamed by a false imputation about its financial soundness or business ethics. Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 (N.D.Cal.1977); Golden Palace Inc. v. National Broadcasting Co., Inc., 386 F.Supp. 107 (D.D.C.1974) aff'd 530 F.2d 1094 (D.C.Cir.1976); se......
  • 481 F.Supp. 919 (N.D.Iowa 1978), C 76-3048, Littlefield v. Fort Dodge Messenger
    • United States
    • Federal Cases United States District Courts 8th Circuit
    • December 29, 1978
    ...Inc., 429 F.Supp. 167 (D.D.C.1977), Affirmed 188 U.S.App.D.C. 185, 578 F.2d 427 (1978); Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 Page 923 Rosanova v. Playboy Enterprises, Inc., 411 F.Supp. 440 (S.D.Ga.1976); Donaldson v. Washington Post Company, Civil Action No. 2331-......
  • 367 N.W.2d 476 (Minn. 1985), C5-82-1519, Jadwin v. Minneapolis Star and Tribune Co.
    • United States
    • Minnesota Supreme Court of Minnesota
    • May 3, 1985
    ...Benefit Life Insurance, 375 So.2d at 240 (investigation by state insurance department); Trans World Accounts, Inc. v. Associated Press, 425 F.Supp. 814 (N.D.Cal.1977) (proposed administrative complaint by the FTC against These cases reflect the increasing importance attached by the United S......
  • Free signup to view additional results