U.S. Steel Corp. v. Darby

• Decision Date: 04 August 1975
• Docket Number: No. 74-2665,74-2665
• Citation: 516 F.2d 961
• Parties: UNITED STATES STEEL CORP., Plaintiff-Appellee, v. Elton H. DARBY, Defendant-Third Party Plaintiff-Appellant, v. SOUTHERN FABRICATING COMPANY, INC., Third Party Defendant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 961

516 F.2d 961

UNITED STATES STEEL CORP., Plaintiff-Appellee, v. Elton H. DARBY, Defendant-Third Party Plaintiff-Appellant, v. SOUTHERN FABRICATING COMPANY, INC., Third Party Defendant.

No. 74-2665.

United States Court of Appeals,

Fifth Circuit.

Aug. 4, 1975.

Robert L. Potts, Ernest N. Blasingame, Jr., Florence, Ala., for defendant-third party plaintiff-appellant.

John D. Clements, Birmingham, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before BROWN, Chief Judge, and GEWIN and THORNBERRY, Circuit Judges.

THORNBERRY, Circuit Judge:

In early 1970 Southern Fabricating Company, Inc. began to make regular credit purchases of steel manufactured by United States Steel Corporation (USS). The manufacturer filled steel purchase orders in April, May, and June 1971 despite Southern Fabricating's failure to keep current on its payments. Several times in May 1971 USS unsuccessfully attempted to determine the reason for the delinquency. Then in June 1971 Southern Fabricating personnel asserted that the steel had proved defective. Relations between the two companies deteriorated during the summer of 1971, and they ceased dealing with each other in August 1971. Southern Fabricating then had an outstanding balance of approximately $84,000 in their account with USS. On July 6, 1972 USS filed suit on a guaranty agreement to recover this amount from E. H. Darby, ¹ owner of a controlling interest in Southern Fabricating.

In addition to denying liability under the guaranty agreement, Darby counterclaimed against USS for defamation of his business reputation, and, in a third party complaint, sought indemnity from Southern Fabricating for any amounts paid to USS. Southern Fabricating entered into the proceedings with a breach of warranty claim against USS. The parties eventually settled the quality claim that generated the litigation, with Southern Fabricating and Darby paying USS $64,500. Darby's defamation claim against USS was expressly excepted from the settlement agreement, but the district court subsequently granted USS's motion for summary judgment on that claim. That action forms the basis for Darby's appeal here. After a careful review of the record, we find the district court properly granted summary judgment for USS and affirm.

Fed.R.Civ.P. 56 governs motions for summary judgment. The district court shall render summary judgment for the moving party "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). ² The moving party bears the burden of showing both the absence of a genuine issue as to any material fact and that judgment is warranted as a matter of law. Benton-Volvo-Metairie, Inc. v. Volvo Southwest, Inc., 479 F.2d 135 (5th Cir. 1973); Palmer v. Chamberlin, 191 F.2d 532 (5th Cir. 1951). In considering the motion, the district court must draw inferences most favorable to the party opposing the motion, and take care that no party will be improperly deprived of a trial of disputed factual issues. Dassinger v. South Central Bell Tel. Co., 505 F.2d 672 (5th Cir. 1974); 10 C. Wright & A. Miller, Federal Practice & Procedure § 2712. The appellate court reviewing the district court's action on a motion for summary judgment employs the same standards. Poller v. Columbia Broadcasting System,368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Benton-Volvo-Metairie, Inc. v. Volvo Southwest, Inc., supra ; 10 C. Wright & A. Miller, Federal Practice & Procedure § 2716.

The essence of the tort of defamation is injury to one's public reputation. Dungan v. State, 2 Ala.App. 235, 57 So. 117 (1911). As the Alabama Supreme Court recently stated:

The definitions of libel, as found in the cases, vary somewhat in phraseology, and are more or less comprehensive, as may be called for by the particular charge involved in the case. Generally, any false and malicious publication, when expressed in printing or writing, or by signs or pictures, is a libel, which charges an offense punishable by indictment, or which tends to bring an individual into public hatred, contempt, or ridicule, or charges an act odious and disgraceful in society. This general definition may be said to include whatever tends to injure the character of an individual, blacken his reputation, or imputes fraud, dishonesty, or other moral turpitude, or reflects shame, or tends to put him without the pale of social intercourse.

Bowling v. Pow, 293 Ala. 178, 301 So.2d 55 (1974) (quoting Justice Merrill in McGraw v. Thomason, 265 Ala. 635, 93 So.2d 741 (1957)). Publication of the defamatory matter is an essential element of the tort. Burney v. Southern Ry., 276 Ala. 637, 165 So.2d 726 (1964); Weir v. Brotherhood of Railroad Trainmen, 221 Ala. 494, 129 So. 267 (1929). That element is missing here.

Alabama originally adopted a very liberal interpretation of the publication requirement in defamation cases. In Ferdon v. Dickens, 161 Ala. 181, 49 So. 888 (1909) the Alabama Supreme Court found that dictation of a libelous letter to a stenographer constituted sufficient publication to maintain an action for defamation. But in Burney v. Southern Railway Co., 276 Ala. 637, 165 So.2d 726 (1964), the Alabama Supreme Court limited the Ferdon principle in the corporate context. In Burney, the Alabama court reviewed a lower court's grant of summary judgment for the defendant who had dictated an allegedly libelous memo to Burney and another person accusing them of falsifying their time tickets for July 22, and July 23, 1958. The memo was never shown to anyone other than a Southern Railway Company employee. After reviewing the relevant Alabama decisions, Justice Merrill stated:

We reaffirm the holding in Ferdon v. Dickens, 161 Ala. 181, 49 So. 888, and Berry v. City of New York Ins. Co., 210 Ala. 369, 98 So. 290, but also reaffirm the limitations of these two cases as limited by McDaniel v. Crescent Motors, Inc., 249 Ala. 330, ...