Antwerp Diamond Exchange of America, Inc. v. Better Business Bureau of Maricopa County, Inc.

• Citation: 637 P.2d 733,130 Ariz. 523
• Decision Date: 23 November 1981
• Docket Number: No. 15345,15345
• Parties: ANTWERP DIAMOND EXCHANGE OF AMERICA, INC., an Arizona corporation; and Charles E. Erickson, Appellants, v. BETTER BUSINESS BUREAU OF MARICOPA COUNTY, INC., an Arizona corporation; John Does I through X and Black and White Corporations I through X, Appellees.
• Court: Supreme Court of Arizona

Page 733

637 P.2d 733

130 Ariz. 523

ANTWERP DIAMOND EXCHANGE OF AMERICA, INC., an Arizona corporation; and Charles E. Erickson, Appellants, v. BETTER BUSINESS BUREAU OF MARICOPA COUNTY, INC., an Arizona corporation; John Does I through X and Black and White Corporations I through X, Appellees.

No. 15345.

Supreme Court of Arizona, In Division.

Nov. 23, 1981.

Glynn W. Gilcrease, Jr., Tempe, for appellants.

Weyl, Guyer, MacBan & Olson by Thomas G. Bakker, Phoenix, for appellees.

CAMERON, Justice.

This is an appeal from the granting of motions by the defendant, Better Business Bureau of Maricopa County, for summary judgments against the plaintiffs, Antwerp Diamond Exchange of America, Inc., and Charles E. Erickson, its president, in three counts alleging libel, violation of the Consumer and Credit Reporting Acts of the United States and the State of Arizona, 15 U.S.C. § 1681 et seq. and A.R.S. § 44-1691 et seq., and tortious interference with business relationships. We have jurisdiction pursuant to Rule 19(e), Rules of Civil Appellate Procedure, 17A A.R.S.

We must answer the following questions on appeal:

1. Were the plaintiffs Antwerp and Erickson "public figures" within the reach of the United States Constitution and New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964)?

2. Did the Better Business Bureau violate its conditional privilege in making reports about the plaintiffs?

3. Did the Better Business Bureau violate the federal or state consumer or credit reporting laws, 15 U.S.C. § 1681 or A.R.S. § 44-1691, et seq.?

4. Did the defendant tortiously interfere with the plaintiffs' business relationships?

The facts necessary for a determination of these issues are as follows. Antwerp Diamond Exchange of America was an Arizona corporation incorporated in July, 1976, for the primary purpose of selling diamonds and other precious stones. Sales were generated by media advertising, mailing and telephone solicitations. Charles Erickson was Antwerp's president. The Better Business Bureau is a non-profit membership corporation established and financed by businesses to encourage voluntary self-regulation. According to its policy manual, the Better Business Bureau "promotes truth in advertising and selling; maintains an impartial attitude towards firms and individuals; and is dedicated to the building and preservation of public confidence in legitimate business."

On 10 August 1976, Erickson met with the manager of the Better Business Bureau, Mr. C. Van Haaften, to discuss Antwerp's participation in the Bureau. At the meeting, Van Haaften received Erickson's employment resume and Antwerp's application for membership was encouraged. Shortly thereafter, Antwerp delivered to the Bureau copies of its sales brochure containing information about diamonds, diamond qualities and pricing, and that the expertise of the European Gemological Institute was relied upon for guaranteeing the quality of Antwerp's merchandise.

On 22 September 1976, after having had an opportunity to read Antwerp's brochure, Van Haaften wrote the first of a series of reports made between 22 September 1976 and 10 November 1977. The report stated that the claims of Antwerp that its stones were fully guaranteed and appraised by the European Gemological Institute had "not been verified." Another report contained the statement that "the Bureau has no information as to the existence or qualifications of this institute." In addition, the reports noted that Antwerp was using the names of First National Bank officials as references which the Bureau believed to be against bank rules. Affidavits submitted by the bank's representatives indicate that the names were used with the bank's permission and that information concerning Antwerp's account at the First National Bank had been authorized for public release to prospective customers.

On 11 November 1976, the Better Business Bureau published another report which repeated the statement about the "unverified" nature of Antwerp's claims. The report concluded that because the Bureau had "been advised" of the speculative nature of diamond investment, "investors are urged to exercise caution and review carefully claims of the company." Substantially similar reports were issued on six separate occasions. Throughout this time, Antwerp was vigorously objecting to the Bureau's reports and was offering to supply information as to the veracity of its claims.

In a report dated 19 August 1977, the Bureau stated that:

"According to a news article 8/16/77, Antwerp Diamond Exchange of America has been charged with fraudulently misrepresenting the investiment potential and the quality of diamonds offered for sale to persons in at least 10 states. Diamonds and records have been impounded by the Phoenix Organized Crime Bureau from the company's offices and telephone boiler room."

A hearing was held on 24 August 1977, in the Superior Court of Maricopa County, to consider a motion to suppress the search warrant against the business officers of Antwerp. The Maricopa County Superior Court, after the hearing, found that there was no probable cause to believe that Antwerp had perpetrated fraud or misrepresentation in its literature or solicitations and that "all facts relied upon by this court in issuing the warrant have been sufficiently controverted." The judge further stated:

" * * * The contestant has sufficiently controverted that portion of the affidavit which indicated fraudulent investment potential."

On 29 August 1977, Antwerp's attorney, in a letter to the Better Business Bureau, objected to the word "charged" in the report. The Better Business Bureau amended the report to read "accused" rather than "charged." Antwerp also called the Better Business Bureau's attention to Judge McDonald's ruling, particularly with reference to the ruling on the investment potential of the stones sold by Antwerp.

There is no indication that the Better Business Bureau attempted to obtain a copy of Judge McDonald's findings and order. The only comment on the judge's ruling was to report the decision and state that "(i)t is our position that Judge McDonald did not verify in the court hearing the claim with respect to the investment potential * * *."

From the granting of the motion for summary judgment, Antwerp and Erickson appeal. In considering this matter on appeal, it must be kept in mind that in a motion for summary judgment, the evidence, as well as all inferences reasonably drawn therefrom, will be viewed in the light most favorable to the parties against whom the summary judgment was rendered. Mobile Home Estates, Inc. v. Levitt Mobile Homes Systems, Inc., 118 Ariz. 219, 575 P.2d 1245 (1978); Boyle v. City of Phoenix, 115 Ariz. 106, 563 P.2d 905 (1977). In order to grant a motion for summary judgment in this case, the trial court must have found that there were no genuine issues of material fact and that the Better Business Bureau was entitled to judgment as a matter of law. Ferree v. City of Yuma, 124 Ariz. 225, 603 P.2d 117 (App.1979).

ARE PLAINTIFFS PUBLIC FIGURES?

The United States Supreme Court in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), applied the First and Fourteenth Amendments of the United States Constitution to protect publishers from the consequences of their defamatory remarks about public figures unless there is a showing of "actual malice." Actual malice is defined as a statement made with "knowledge that it was false or (a) reckless disregard of whether it was false or not." New York Times Co. v. Sullivan, supra, 376 U.S. at 279-80, 84 S.Ct. at 726, 11 L.Ed.2d at 706; Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L.Ed.2d 154 (1976). As long as the person being libeled is a public figure, the "actual malice" standard applies irrespective of a publisher's characterization as "media" or "non-media." See e.g., Davis v. Schuchat, 510 F.2d 731 (D.C.Cir.1975); Fox v. Kahn, 421 Pa. 563, 221 A.2d 181, cert. denied 385 U.S. 935, 87 S.Ct. 292, 17 L.Ed.2d 215 (1966); Jackson v. Fillibeu, 281 A.2d 604 (Del.1971).

A public figure is one who:

"may have attained that status by position alone * * * (or) by his purposeful activity amounting to a thrusting of his personality into the 'vortex' of an important public controversy, * * * (or one who) commanded sufficient continuing public interest and had sufficient access to the means of counterargument to be able 'to expose through discussion the falsehood and fallacies' of the defamatory statements." Curtis Publishing Co. v. Butts, 388 U.S. 130, 155, 87 S.Ct. 1975, 1991, 18 L.Ed.2d 1094, 1111 (1967).

Or those persons who are:

"intimately involved in the resolution of important public questions or, by reason of their fame, shape events in areas of concern to society at large." Curtis Publishing Co. v. Butts, supra, 388 U.S. at 164, 87 S.Ct. at 1996, 18 L.Ed.2d at 1116. (Warren, C. J., concurring)

The Better Business Bureau contends that Antwerp and its president are public figures within the meaning of New York Times, supra, because of Antwerp's "wide spread and far-flung mail and solicitation campaigns." We do not agree. Even were we to hold that a person, through commercial advertising, could become a "public figure," in the instant case, the plaintiffs' mail and telephone solicitations fall short of making them "public figures" as envisioned by the United States Supreme Court. We need not apply the constitutional actual malice standard to defendant's reports. Peagler v. Phoenix Newspapers, Inc., 114 Ariz. 309, 560 P.2d 1216 (1977).

DID THE BETTER BUSINESS BUREAU VIOLATE ITS CONDITIONAL PRIVILEGE?

Antwerp and Erickson, then, are not "public figures," but "private individuals" for the purposes of this action. As to private individuals, the United States Supreme Court has stated:

"(s)o long as they do not impose liability without fault, the States may define for themselves the appropriate...