Hood v. Dun & Bradstreet, Inc.

• Citation: 486 F.2d 25
• Decision Date: 31 October 1973
• Docket Number: No. 72-1233.,72-1233.
• Parties: David Pope Hood, Plaintiff-Appellant, v. DUN & BRADSTREET, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

486 F.2d 25 (1973)

David Pope Hood, Plaintiff-Appellant, v. DUN & BRADSTREET, INC., Defendant-Appellee.

No. 72-1233.

United States Court of Appeals, Fifth Circuit.

September 14, 1973.

Rehearing and Rehearing Denied October 31, 1973.

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Rex T. Reeves, Merrell Collier, Atlanta, Ga., for plaintiff-appellant.

Hugh M. Dorsey, Jr., W. Rhett Tanner, Atlanta, Ga., for defendant-appellee.

Before GOLDBERG, AINSWORTH and INGRAHAM, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 31, 1973.

INGRAHAM, Circuit Judge:

This is an action for libel predicated upon allegedly false and defamatory statements published in a credit report provided by defendant Dun & Bradstreet, Inc. The district court, 335 F. Supp. 170, granted defendant's motion for summary judgment, holding that defendant was entitled to a conditional privilege under Georgia law and that there was an absence of actual malice on behalf of the defendant necessary to overcome a conditional privilege. Plaintiff appeals.

The issues on appeal are as follows: (1) whether the statements are libelous, and if so, whether they are libelous per se; (2) whether defendant is entitled to a conditional constitutional privilege under the First Amendment and New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964); (3) whether defendant is entitled to a conditional privilege under Georgia law; and (4) the necessary proof of damages.

The material facts of the case are undisputed. Plaintiff David Pope Hood is a building contractor conducting the principal business of the construction of gasoline filling stations in and around Atlanta, Georgia. He has been engaged in the construction business for approximately twenty-seven years and has maintained a good reputation in conducting his financial affairs and operating the business.

The defendant is a credit reporting agency which prepares and provides for its subscribers credit information regarding virtually any person or business organization. The credit information is provided to subscribers pursuant to a written contract which specifically states that any information furnished by the defendant is for the sole use of the subscriber.

On October 11, 1968, the defendant Dun & Bradstreet prepared a credit report on the plaintiff and distributed the report to eleven subscribers. Included in this report were four allegedly libelous statements which read as follows:

"(1) In interview of October 10 1968 Mrs. Hood referred all details to her husband who had been inavailable (sic) for comment to date.

"(2) As a matter of interest, David P. Hood has always declined financial information other than to say that sales are in excess of $100,000 and that net worth is in excess of $3,000. These two estimates were submitted in July 1967.

"(3) Public records reveal suit # 248479 filed June 10 1968, for $103, Whittock Dobbs Inc. v. subject. Also suit # 238558 filed Apr 3 1968, Westron Corp vs. subject.

"(4) Although complete details are not available, working capital appears limited at times with some trade, slowness noted."

Defendant acknowledges that the two law suits reportedly filed against plaintiff were actually filed against another individual named David Hood. Defendant does not dispute the falsity of the additional statements in the report.

Plaintiff filed suit in the District Court of the Northern District of Georgia, alleging that the published statements were false and defamatory, that such statements tended to harm him in his business, and that as a consequence of the statements he had in fact suffered injury. Both parties filed motion for summary judgment, and the district court granted defendant's motion, holding that defendant was entitled to a conditional privilege under Georgia law, and that there was no showing of actual malice to overcome the privilege.

I. Libel or libel per se

Pursuant to Georgia law, an action for libel lies where a published statement is false and defamatory, "tending to injure the reputation of an individual, and exposing him to public hatred, contempt or ridicule."¹ Additionally, the definition of slander in Georgia has been incorporated into the definition of libel,² and therefore false and defamatory statements made in regard to another in "his trade, office, or profession calculated to injure him therein" also constitutes an action for libel.³

Georgia also acknowledges that in addition to libel per se, there is libel by innuendo. While plain and unambiguous words must be construed in the normal and ordinary meaning, ambiguous words may be clarified in meaning by "reference to the circumstances" and thereby constitute libel by innuendo.⁴

In accordance with these principles, the district court properly resolved the issue whether the statements made by defendant were libelous, and if so, whether they were libelous per se. Essentially, the district court held that the first two statements were plain, unambiguous and harmless and therefore clearly did not constitute libel. Such statements simply do not injure the plaintiff's reputation and do not expose him to public hatred, contempt or ridicule as required under Georgia law.

The additional two statements, however, were found by the district court to be ambiguous and therefore capable of being libelous by innuendo where the ambiguity is clarified by reference to the circumstances. Moreover, the district court declined to hold that the statements were libelous per se as they did not "impute to another conduct, characteristics or a condition incompatible with proper exercise of lawful business or trade." Seaboard Warehouse Terminals, Inc. v. Dun & Bradstreet, Inc., 328 F.Supp. 291 (S.D.Fla., 1971). Consequently, a jury might conclude that the final two statements are libelous by innuendo. Hood v. Dun & Bradstreet, Inc., 335 F.Supp. 170 (N.D.Ga., 1971).

II. First Amendment Privilege

Defendant contends that the publication of a false credit report should be afforded a conditional constitutional privilege whereby Dun & Bradstreet would not be liable for such communication unless the plaintiff can prove that the publication was made with actual malice. Under New York Times v. Sullivan, supra, and more specifically Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971), defendant asserts that a credit report is constitutionally protected by the First Amendment guarantees of freedom of the press because it is a matter of "general or public interest." In accordance with the Third⁵ and Tenth⁶ Circuits, the district court held that defendant was not entitled to such a privilege because the medium was not incompassed in the area of constitutional protection. Furthermore, the district court held that the freedom of discussion and debate on public issues does not apply where the communication pursuant to contractual terms is to be kept in strict confidence. We agree.

Whether or not a credit report is privileged as a matter of public interest must be answered in light of the constitutional guarantees of the First Amendment. In New York Times v. Sullivan, supra, the Supreme Court declared that pursuant to First Amendment freedoms a "public official" could not recover for libelous statements unless he could prove that the statements were made with "actual malice." Actual malice was defined by the Court as "knowledge that the statement was false or reckless disregard of whether it was false or not." Subsequent Supreme Court decisions expanded this rule to include "public figures"⁷ and matters of "general or public interest."⁸ As stated previously, defendant contends that the credit report falls within the scope of matters of public or general interest and consequently is afforded the First Amendment protection of free speech.

We hold that matters of general and public interest do not include libelous and defamatory publications of such a commercial nature as credit reports. The concept of purely commercial speech as an area where First Amendment protection does not apply was originally articulated in Valentine v. Chrestensen, 316 U.S. 52, 62 S.Ct. 920, 86 L.Ed. 1262 (1942). In Valentine a city ordinance that banned the distribution of handbills soliciting a submarine tour was challenged as violative of First Amendment rights. The Supreme Court upheld the ordinance declaring that commercial speech was unprotected by the First Amendment. It is important to note that the transaction in Valentine was nothing more than the solicitation of a commercial venture. While the Valentine decision might have been subsequently weakened in some respects,⁹ the commercial speech doctrine was revitalized recently in Pittsburgh Press Co. v. Pittsburgh Com'n on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669. The Court in Pittsburgh Press upheld an ordinance that prohibited newspapers from referring to sex in employment headings in want ads. The Court distinguished New York Times, pointing out that the Court there was concerned with a publication that "communicated information, expressed opinion, recited grievances, protested claimed abuses and sought financial support on behalf of a movement whose existence and objectives are matters of the highest public interest and concern." The Court found that the commercial advertisements were more in accordance with the principles of Valentine than with those of New York Times because the commercial advertisements did not express such social policies. Similarly, because this commercial credit report did not express social concerns and grievances of the type described above, we find that such a report coincides with the doctrine of commercial speech. On the facts of this case, the credit report was distributed pursuant to a written contract, whereby the report was to be maintained in strict confidence. It was distributed to an extremely limited readership of eleven subscribers for commercial purposes and clearly without regard to social...