Sunward Corp. v. Dun & Bradstreet, Inc.

• Decision Date: 02 August 1983
• Docket Number: Civ. A. No. 82-K-147.
• Citation: 568 F. Supp. 602
• Parties: SUNWARD CORPORATION, et al., Plaintiffs, v. DUN & BRADSTREET, INC., Defendants.
• Court: U.S. District Court — District of Colorado

568 F. Supp. 602

SUNWARD CORPORATION, et al., Plaintiffs, v. DUN & BRADSTREET, INC., Defendants.

Civ. A. No. 82-K-147.

United States District Court, D. Colorado.

August 2, 1983.

COPYRIGHT MATERIAL OMITTED

William E. Murane, and A. Bruce Jones, Holland & Hart, Denver, Colo., for plaintiffs.

Fred H. Bartlit, Jr., Bruce A. Hubbard, Kirkland & Ellis, Denver, Colo., for defendants.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

This defamation action was filed under this court's diversity jurisdiction, Title 28 U.S.C. Section 1332. Plaintiffs are affiliated corporations, incorporated under the laws of the State of Wyoming with their principal place of business in Colorado. They are engaged in the manufacture and sale of unassembled steel buildings. D & B is a Delaware corporation with its principal place of business in New York. It collects and disseminates information relating to the financial standing, credit, character, responsibility and general reputation of persons, firms and corporations engaged in business. It provides this information to subscribers for a fee. In 1974 and until the present, Sunward has refused to provide defendant with any information regarding the corporations and has advised D & B that no information concerning Sunward should be provided to others.

The amended complaint alleges that since 1974, and particularly on September 15, 1981, D & B has provided information concerning Sunward to subscribers and that these reports contain false, libelous and defamatory matter. Plaintiffs notified defendant that the information contained in the September, 1981 credit report was false and defamatory. D & B informed Sunward that it was its practice to "estimate" a corporation's financial condition based on its own observations if that corporation refused to provide the requested information. After an October, 1981, meeting with Sunward at D & B's Denver office, D & B sent a notice to all subscribers asking them to disregard the credit information in the September 15, 1981 report concerning Sunward.

Plaintiffs' four causes of action allege libel, damages for impairment of reputation, diminution of credit ratings as a result of defendant's wanton and reckless disregard of plaintiffs' rights, loss of sales, profits and credit worthiness, and libel per se based on alleged statements by defendant that plaintiffs were "under investigation" or on a "watch list." Sunward seeks compensatory, punitive, special and actual damages plus injunctive relief.

D & B's motion for summary judgment argues that the credit reports are not libelous, that they are protected by a qualified privilege, that Sunward's claim for punitive damages is not supported by allegations contained in the amended complaint, and that D & B's alleged statements that Sunward was "under investigation" are neither slanderous nor libelous per se.

Summary judgment under Rule 56, F.R.Civ.P. is a drastic remedy that is appropriate only where there exists no genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157-159, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1383 (10th Cir.1980); Jones v. Nelson, 484 F.2d 1165, 1168 (10th Cir.1973). Under the rule, no margin exists for disposition of factual issues, and it does not serve as a substitute trial of the case nor require the parties to dispose of the litigation through affidavits. Commercial Iron & Metal Co. v. Bache & Co., 478 F.2d 39, 41 (10th Cir.1973). As I recently discussed in Walters v. Linhof, 559 F.Supp. 1231 (D.C.Colo.1983), under the right circumstances, summary judgment has been "frequently granted" in defamation actions. Defendant has not met the requisite standard of proof in this action, and for the following reasons, the defendant's motion for summary judgment is denied in part, and granted in part.

I. LIBEL PER SE

I note in passing that "in actions involving slander, there is always a temptation to write a treatise on the subject. I shall attempt to suppress that tendency and deal only with the specific issues at hand." Cinquanta v. Burdett, 154 Colo. 37, 39, 388 P.2d 779 (1963) (Pringle, J.).

D & B claims it is entitled to summary judgment on the first and third claims for relief because Sunward has not been libeled. "Even assuming that each fact in the reports alleged to be incorrect by the plaintiffs was in error, the D & B reports are not libelous." Defendant's Brief at 3. Sunward claims it was libeled when D & B misidentified one of its affiliated companies; incorrectly identified the corporate officers' names; badly underestimated the number of employees, the amount of total sales, and the value of its inventory and fixtures; incorrectly designated the businesses in which Sunward was engaged; and misdescribed some of Sunward's sales territory.

For language to be libelous per se, the facts or reports must be deplorable, derogatory, or disgraceful, and the element of disgraceful imputation must be clearly expressed on the face of the writing. Bernstein v. Dun & Bradstreet, 149 Colo. 150, 368 P.2d 780, 784 (1962). In evaluating a statement or article alleged to be libelous per se,

the court must interpret alone, without aid of inducements, colloquialisms, innuendos, and explanatory circumstances. To be libelous per se, the publication must contain defamatory words specifically directed at the person claiming injury, which words must, on their face, and without the aid of intrinsic proof be unmistakably recognized as injurious. (Citations omitted.)

Inter-State Detective Bureau v. The Denver Post, 29 Colo.App. 313, 484 P.2d 131, 133 (1971). Words which require an innuendo are not libelous per se. In determining whether words are libelous, they are to be given their ordinary and popular meaning. Knapp v. Post Printing and Publishing Co., 111 Colo. 492, 144 P.2d 981 (1943).

I agree with D & B that these inaccuracies and misstatements are not libelous per se. The language in the reports is neutral in content, neither scurrilous nor inflammatory. Only by going beyond the face of the report would the defamation become clear. As such, I find the issue is whether the report is libel per quod.

II. LIBEL PER QUOD

D & B argues that since its reports require reference to extrinsic facts to establish the defamatory meaning, Sunward cannot recover unless it proves the libel caused special damage to it. D & B suggests that Sunward has been unable to produce any evidence after a year of discovery that it was damaged by the reports. As far as it goes, D & B is correct. Libel per quod, like slander, typically is actionable only where special damages are pleaded and proved.¹ Bernstein v. Dun & Bradstreet, supra, suggests that an action for libel per quod does not require proof of special damages where mercantile dishonesty or insolvency is imputed. Judge Doyle amplified this suggestion in Wagner v. Rodeo Cowboys Assoc., 290 F.Supp. 369 (Colo.1968):

There are, however, exceptions to this special damage rule. One well recognized exception obtains where the libelous imputation affects another's trade, profession or office. As applied to a libel case, this rule is a broad one which includes defamatory utterances imputing any misconduct whatever in the conduct of the other's calling.

* * * * * *

That this exception long recognized in slander cases applies fully to libel is shown by a relatively recent decision of the Colorado Supreme Court in Bernstein v. Dun & Bradstreet....

Wegner v. Rodeo Cowboys Association, 290 F.Supp. 369, 374 (D.C.Colo.1968). And see Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 408 F.Supp. 1219, 1234 (D.C.Colo.1976), modified on other grounds, 561 F.2d 1365 (10th Cir.1977).²

It is beyond cavil that a Dun & Bradstreet rating is directed to and concerns the business of the subject of the report. D & B is recognized as a leading disseminator of information concerning financial standing, credit, character, responsibility and general reputation of business entities. In the instant action, plaintiffs, multi-million dollar affiliate corporations with hundreds of employees, were characterized as a business employing only five persons with sales in the range of $500,000 to $750,000. This is not a good reference for a company engaged in the manufacture and sale of steel buildings and could reflect on plaintiffs' fitness to conduct its business. I hold that the facts of this case fall within this recognized exception, that damages are presumed and need not be specifically alleged as argued by defendant. Defendant's motion for summary judgment on this ground is denied.

III. QUALIFIED PRIVILEGE

After a good deal of confusion in their briefs, the parties are in agreement that this motion for summary judgment does not involve a constitutional privilege based on the First Amendment. D & B argues, however, that its reports are protected by a common-law, qualified privilege. This privilege, it contends, applies to any communication made in good faith where the parties making and receiving the communication have corresponding legal, social or moral duties to do so. Because credit reporting is a necessary business service and there is evidence of abundant good faith on D & B's part with no evidence of actual malice, D & B argues that summary judgment must be granted in its favor. Plaintiffs argue that defendant is not entitled to a qualified privilege for this report and that the issues of malice and good faith are questions precluding summary judgment.

The law of defamation provides two types of privilege: absolute and qualified. "A privileged communication is an exception to the rule that every defamatory publication implies malice." Denver Public Warehouse Co. v. Holloway, 34 Colo. 432, 83 P. 131, 132 (1905). Absolute privileges arise in communications published in judicial or legislative proceedings, executive communications, communications between husband and wife, political...