Retail Credit Co. v. Russell

• Decision Date: 01 July 1975
• Docket Number: No. 29854,29854
• Citation: 218 S.E.2d 54,234 Ga. 765
• Parties: RETAIL CREDIT COMPANY v. Raymond F. RUSSELL.
• Court: Georgia Supreme Court

Page 54

218 S.E.2d 54

234 Ga. 765

RETAIL CREDIT COMPANY v. Raymond F. RUSSELL.

No. 29854.

Supreme Court of Georgia.

July 1, 1975.

Rehearing Denied July 15, 1975.

Hansell, Post, Brandon & Dorsey, Hugh M. Dorsey, Jr., W. Rhett Tanner, Atlanta, for appellant.

William R. Parker, Tucker, for appellee.

HALL, Justice.

This is a libel case in which a jury verdict in Fulton County Superior Court awarded plaintiff Russell damages of $15,000 against Retail Credit Company (hereinafter 'Retail Credit'), a commercial investigative and reporting company which sells to its subscribers reports on individuals based on its investigations into those individuals' credit, personal, and employment backgrounds. Among the information reported by Retail Credit about Russell was the alleged libel, namely, that he was 'dismissed for dishonesty and would not be eligible for rehire' and that he 'admitted to taking money over a period of time' from his former employer, Top O'Peachtree.

Plaintiff's trial evidence tended to show that in the fall of 1969 while he was employed by Equitable Life Assurance Society ('Equitable Life'), he first learned that the libel was being published by Retail Credit, and it was published to his knowledge to Equitable Life. Russell then obtained from the Top O'Peachtree owner-operator, Robert H. Jones, a letter completely refuting the libel and endorsing Russell as an employee. Russell took this letter to Retail Credit asking that their records be corrected, and was assured that the matter would be reinvestigated and retractions sent to subscribers receiving the earlier, erroneous report. Later in 1969 he went again to Retail Credit and learned that retractions had not yet been sent, but they were again promised. Subsequently, having knowledge that Mr. Huey Woods with Franchise Realty Interstate Corp. (hereinafter, 'McDonald's'), had received the erroneous report, Russell telephoned him to ask if he had received a retraction and was told he had not. For the third time Russell visited Retail Credit asking that the retractions be sent. Each time, Russell asked for the identities of the recipients of the earlier report, so he might contact them himself in an effort to salvage his reputation; and each time Retail Credit refused this information, saying they would take care of it.

Subsequently, during the fall of 1970, Russell saw at the offices of Culpepper Realty a recent Retail Credit report on him dated October 28, 1970, repeating the damaging misinformation about his Top O'Peachtree employment. Russell then retained an attorney who wrote to Retail Credit, receiving back a letter from Mr. Delaney in Retail Credit's legal department denying that any libelous report was present in Retail Credit's files and stating that 'Quite frankly, I do not believe Mr. Russell need be concerned about this matter.' This suit was then filed. Plaintiff introduced into evidence, among other items, the October 28, 1970, Culpepper report, and Mr. Culpepper testified that he received it from Retail Credit and that he never received any retraction.

Retail Credit's trial evidence tended to show that according to their files, only two companies, State Farm Insurance Company and E. I. DuPont de Nemours & Company, received the earlier unfavorable report, and that full retractions had been sent to both companies. They made no claim that retractions had been sent to any other companies. Retail Credit, throughout the discovery phase of the lawsuit and throughout trial, disclaimed all knowledge of the defamatory October 28, 1970 'Culpepper report.' Retail Credit did not, however, claim that the report was a forgery. In concluding its presentation, Retail Credit presented a witness who testified that the alleged libel was in fact true.

The case went to the jury in this posture, and the jury determined that the allegation was false and defamatory and constituted libel. Following the rendition of the jury's $15,000 verdict for Russell, the trial court additionally entered a narrowly-drawn order enjoining Retail Credit from the further publication of the adjudicated libel. Retail Credit now appeals.

I. The Fair Credit Reporting Act.

As an initial matter, we note that the Fair Credit Reporting Act, 15 U.S.C.A. § 1681-1681t (Supp.1971), effective April 25, 1971 (Act of October 26, 1970, § 602, 84 Stat. 1136), is not applicable to this suit. That Act provides a conditional privilege in some circumstances to agencies such as Retail Credit who furnish information concerning an individual directly to that individual upon his request. However, in situations such as that presented here, concerning information disseminated to subscribers of the company, the Act's conditional privilege does not apply and state libel law controls. See generally, the Fair Credit Reporting Act: Are Business Credit Reports Regulated? 1971 Duke L.J. 1229; Annot., Construction and Application of F.C.R.A., 17 A.L.R.Fed. 675 (1973).

II. The Claim of Privilege.

The heart of Retail Credit's defense to this suit is its claim that in providing consumer reports pursuant to its contracts with its subscribers (customers), it is protected by a conditional privilege which may be overcome only by plaintiff's showing that false and defamatory matter was published with malice.

Correctly, Retail Credit does not bottom this claim on the First Amendment, as federal decisions have made plain that no First Amendment privilege is available for false and defamatory credit or other consumer reports. As the Fifth Circuit recently ruled in disposing of such a claim of constitutional privilege when urged by Dun & Bradstreet, Inc., 'We hold that matters of general and public interest do not include libelous and defamatory publications of such a commercial nature as credit reports.' Hood v. Dun & Bradstreet, Inc., 486 F.2d 25, 29 (5th Cir. 1973). As the Supreme Court recently wrote in an analogous context in Gertz v. Welch, 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) (a decision rendered after the date of the verdict in this case), 'We hold that, so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual.' Id. p. 347, 94 S.Ct. at 3010.

Rather than a First Amendment claim, Retail Credit urges a statutory conditional privilege grounded in Code Ann. § 105-709. That statute recognizes certain privileges including those claimed here, namely, a privilege for statements made in the performance of a legal or moral public or private duty, (Code Ann. § 105-709(2)), and statements made with the speaker's bona fide intent to protect his own interest (Code Ann. § 105-709(3)). Retail Credit urges that the information here was provided pursuant to contracts with its customers, and for that reason fell within the scope of these privileges. Though we find this argument circular-Retail Credit claims the privilege exists because it has contracted to do something in the doing of which the privilege would be beneficial to it-it is not necessary to consider these Code sections as if they existed in a vacuum, because they have already been construed in a manner adverse to Retail Credit's contentions here.

In Johnson v. The Bradstreet Company, 77 Ga. 172, this court in 1886 considered at claim that the Bradstreet Company had libelled a merchant by an adverse mercantile report. The claimed defense was that the company was privileged under the predecessor of Code Ann. § 105-709(2) because it acted in the performance of a public or private legal or moral duty. The court squarely rejected this defense and ruled that a mercantile report of this nature enjoyed no such privilege which would protect it from liability for false reports.

Johnson considered only the predecessor to Code Ann. § 105-709(2), whereas Retail Credit additionally urges Code Ann. § 105-709(3) as a source of privilege. However, the company's claim under the latter section is but a restatement of that claimed under the former, and need not be separately considered. Under both arguments, it is its contract with its customers which is claimed as the source of the 'duty' and of the 'interest' of Retail Credit. Moreover, Western Union Telegraph Co. v. Pritchett, 108 Ga. 411, 34 S.E. 216 is square authority against the latter claim, as it ruled that an exchange of information such as that considered here does not qualify for the privilege accorded one speaking to protect his own interest.

Retail Credit vigorously asserts that both Johnson and Pritchett should be overruled. It is entirely true, as Retail Credit argues, that the language of the Johnson opinion is moralistic and outdated, and severely denigrates the important social function of responsible credit reporting agencies which contribute to that free flow of information on which so much modern commerce depends. The reasoning of that 1886 decision need not control us now. However, our rejection of the opinion's language does not mean that its result cannot stand if upon examination we find no compelling reason to change the law of this state there established-that credit reports of the type before us enjoy no conditional privilege.

We are convinced that our law should not be changed. Apparently, 48 of the 50 states, excluding only Georgia and Idaho, recognize a conditional privilege in these circumstances. In the face of a conditional privilege, which requires that he prove malice to prevail, a falsely maligned consumer is virtually helpless to protect or avenge his reputation. The conditional privilege recognized almost nationwide would appear to have contributed to the evils which led to passage of the Fair Credit Reporting Act. The pre-Act woes of the consumer are well detailed in Note, The Fair Credit Reporting Act, 56 Minn.L.Rev. 819, 821-824 (1972) which noted that, 'Aggravating this situation (of inaccurate...