Grove v. Dun & Bradstreet, Inc.

• Decision Date: 08 February 1971
• Docket Number: 18756.,No. 18755,18755
• Citation: 438 F.2d 433
• Parties: C. R. GROVE, Appellant in No. 18756, Trustee, et al. and Altoona Clay Products, Inc., a corporation, v. DUN & BRADSTREET, INC., a corporation. Appeal of ALTOONA CLAY PRODUCTS, INC., a corporation, in No. 18755.
• Court: U.S. Court of Appeals — Third Circuit

438 F.2d 433 (1971)

C. R. GROVE, Appellant in No. 18756, Trustee, et al. and Altoona Clay Products, Inc., a corporation, v. DUN & BRADSTREET, INC., a corporation Appeal of ALTOONA CLAY PRODUCTS, INC., a corporation, in No. 18755.

Nos. 18755, 18756.

United States Court of Appeals, Third Circuit.

Argued October 30, 1970.

Decided February 8, 1971.

As Amended on Denial of Rehearing March 15, 1971.

John E. Evans, Jr., Evans, Ivory & Evans, Pittsburgh, Pa., for appellant, Altoona Clay Products, Inc. (Joseph A. Williams, Pittsburgh, Pa., on the brief) for appellants.

Edmund S. Ruffin, III, Thorp, Reed & Armstrong, Pittsburgh, Pa. (Clyde A. Armstrong, Pittsburgh, Pa., on the brief) for appellee.

Before FORMAN, SEITZ and ALDISERT, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

This protracted libel action is again before us requiring that we determine whether the constitutional standard first enunciated in New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L. Ed.2d 686 (1964), extends to private subscription credit reports and whether there was sufficient evidence to support the jury's verdict. Following a $110,000 verdict for the plaintiff, the district court first granted defendant's motion for a new trial and subsequently entered judgment n. o. v. in favor of the defendant. This appeal followed.

Plaintiff, a Pennsylvania corporation engaged in the brokerage of bricks and tile, brought this diversity action against Dun & Bradstreet, a mercantile agency which supplies credit reports to its subscribers. Alleging libel of its business reputation, plaintiff sought damages emanating from the issuance of a false credit report in 1963. At the first trial plaintiff was limited to proof of special damages and a verdict was directed for defendant, Altoona Clay Products, Inc. v. Dun & Bradstreet, Inc., 246 F.Supp. 419 (W.D.Pa.1965). This court reversed, 367 F.2d 625 (3 Cir. 1966), holding that under Pennsylvania law the publication was libel per se and hence actionable without proof of special damages, but that proof of special damages should, in any event, be submitted to the jury. On remand, the jury awarded only general damages in the amount of $110,000. In a lengthy opinion, the trial court denied defendant's motion for judgment n. o. v., but granted a new trial, concluding that proof was lacking that (1) the recipients of the report understood its libelous nature; (2) plaintiff's loss of credit was a direct and proximate result of the erroneous publication, and (3) damages were more than nominal, 286 F.Supp. 899 (W.D.Pa. 1968). Thereafter, the court, in light of subsequent cases involving the Times doctrine, including this court's decision in Rosenbloom v. Metromedia, Inc., 415 F.2d 892 (3 Cir. 1969), cert. granted 397 U.S. 904, 90 S.Ct. 917, 25 L.Ed.2d 85 (1970), sua sponte vacated its new trial order and entered judgment for the defendant "to secure an appealable final order." The court believed it "proper * * * that the serious constitutional question involved here should be resolved before we embark upon a trial of the issues which may be a useless procedure under our view of the controlling constitutional standard."

I.

Defendant periodically issued reports on the plaintiff, which was itself a subscriber to defendant's services. A report issued in January, 1963, included, in addition to the routine assessment of plaintiff's assets, liabilities, and overall rating,¹ a notation that a confession of judgment in the penal sum of $60,000 had been entered against it. In fact, the judgment had been entered against "Altoona Clay Products Company, Inc.," a predecessor to plaintiff's business, but nonetheless a separate corporate entity. Defendant's investigative agent had failed to note the distinction and the erroneous publication resulted. The standard by which this conduct is to be judged is indeed critical to plaintiff's action: clearly no test requiring "actual malice" can be satisfied by these operative facts.²

New York Times v. Sullivan concluded that "the constitutional guarantees require * * * a federal rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the 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." 376 U.S. at 279, 84 S.Ct. at 726 (1964). The Times rule "preempted the law of libel as it related to public officials, making the outcome of such a suit dependent not upon state constitutions, statutes, and decisions, but upon the First Amendment to the Constitution of the United States and its interpretation by the Supreme Court." Cepeda v. Cowles Broadcasting, Inc., 392 F.2d 417, 420 (9 Cir. 1968).

In Time, Inc. v. Hill, 385 U.S. 374, 388, 87 S.Ct. 534, 542, 17 L.Ed.2d 456 (1965), the Supreme Court held that "the guarantees for speech and press are not the preserve of political expression or comment upon public affairs" and declared the constitutional privilege to "embrace all issues about which information is needed or appropriate to enable the members of society to cope with the exigencies of their period." In the companion cases of Curtis Publishing v. Butts (Associated Press v. Walker), 388 U.S. 130, 87 S.Ct. 1975, 18 L. Ed.2d 1094 (1966), these protections were extended to publications concerning "public figures." The burden of demonstrating "actual malice" was thus no longer limited to plaintiffs holding "a position in government which has such apparent importance that the public has an independent interest in the qualifications and performance of the person who holds it." Rosenblatt v. Baer, 383 U.S. 75, 86, 86 S.Ct. 669, 676, 15 L.Ed.2d 597 (1965). Thus those who thrust themselves, either through political action or other activity which invokes public interest or concern, into the public limelight, may no longer find redress in the courts for alleged defamations occurring in the media, without at least a showing of "sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968); Curtis Publishing Co. v. Butts, supra; Garrison v. Louisiana, 379 U.S. 64, 74, 85 S.Ct. 209, 13 L.Ed.2d 125 (1964); Spahn v. Julian Messner, Inc., 18 N.Y.2d 324, 274 N.Y.S.2d 877, 221 N.E.2d 543, remanded on other grounds, 387 U.S. 239, 87 S.Ct. 1706, 18 L.Ed.2d 744 (1966).

Noting in Butts, supra, 388 U.S. at 152, 87 S.Ct. at 1990, "the basic theory of libel has not changed," and crystallizing the competing concerns of the First Amendment and "society's `pervasive and strong interest in preventing and redressing attacks on reputation,' Rosenblatt v. Baer, supra, 385 U.S. at 86, 86 S.Ct. 669," Justice Harlan cautioned, however, that

to take the rule found appropriate in New York Times to resolve the `tension\' between the particular constitutional interest there involved and the interests of personal reputation and press responsibility * * * as being applicable throughout the realm of the broader constitutional interest, would be to attribute to this aspect of New York Times an unintended inexorability at the threshold of this new constitutional development. In Time, Inc. v. Hill, supra 385 U.S. at 390, 87 S. Ct. 534, we counseled against `blind application of New York Times v. Sullivan\' and considered `the factors which arise in the particular context.\' Here we must undertake a parallel evaluation. 388 U.S. at 148, 87 S.Ct. at 1987.

To extend a privilege to defendant's publication greater than that afforded by traditional Pennsylvania libel law, then, we must determine if the facts before us involve a "public figure" or an issue of "real public interest," Rosenbloom v. Metromedia, supra, 415 F.2d at 895.

While we do not here decide whether a corporation is capable of status as a public figure, we hold first that plaintiff is not a public figure within the meaning accorded that term by the foregoing Supreme Court decisions. Not unaware of the difficulty in characterizing plaintiff as a public figure, defendant strenuously urges, therefore, that the issue here is one of legitimate public concern, rendering "the absence of a public figure of no controlling importance." Rosenbloom, supra, 415 F.2d 892 at 896.

Defendant asserts that plaintiff's credit is a "matter of interest to a segment of the public, viz., its suppliers, creditors, architects and public contractors." In support of this contention, defendant notes that plaintiff is a corporation chartered to do business by the Commonwealth of Pennsylvania, and that, in furthering the purposes of this corporate charter, plaintiff periodically involves itself in public projects, including sewerage treatment plants, public school buildings, post offices, public utilities, shopping centers and churches.

We cannot accept the theory that plaintiff's business or credit standing is a matter of "real public interest." It may generally be true that "the modern business corporation by virtue of its pervasive influence on the political, economic, and social aspects of American life, has necessarily become a subject of public concern to the extent that the critics of its operations and behavior must enjoy constitutional protection for erroneous statements made without actual malice."³ But those cases which have required that corporate plaintiffs meet the more difficult constitutional quantum of proof have all involved corporations engaged in activities of real public interest, and are grounded in that distinction.⁴ We are not here dealing with a publication or broadcast alleging, for example, that plaintiff caused substandard building material to be used in these projects. Such operative facts might constitute a matter of grave public interest. Our research discloses no case, however, which would support the...