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:
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
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."
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.
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.,
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"
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,
III. Privilege under Georgia law
Defendant's second contention in regard to privilege is that credit reporting agencies should be afforded a conditional privilege based on Georgia law. To determine the validity of this contention it is necessary for us to examine case authority, statutory enactments and the underlying principles of the conditional privilege itself.
Initially, we point out that the great majority of jurisdictions, with the exception of Georgia
Ga.Code Ann. § 105-709. If this court were to consider the statute in a vacuum, conceivably we could find that credit reports would fall within its provisions and, therefore, would be entitled to a conditional privilege. As early as
Therefore, this court must determine whether there are compelling reasons why we should deviate from these early Georgia decisions. We recognize that federal courts are not immutably bound under Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to follow state court decisions where it appears that a state court considering the identical issue would not rely on such precedent.
The district court, in anticipation of what a state court might hold, reexamined the issue of conditional privilege in regard to credit reporting agencies and concluded that the agency was entitled to such a privilege. The court set forth principally two reasons why a state court would arrive at a conclusion different from that expressed in the early pronouncements of the Georgia Supreme Court. First, relying on Cochran v. Sears & Roebuck Co., 72 Ga.App. 458, 34 S.E.2d 296 (1945), a Georgia court of appeals decision, the district court declared that one should not be held liable for libelous statements where they are made without malice, are properly limited in scope, are limited in distribution, and are made pursuant to a private legal obligation such as a contract. But, see Southeast Bankcard Ass'n v. Woodruff, supra. Second, the court relied on the public interest in the availability of credit information in a commercialized society.
Although the district court's reasoning is not totally without merit, we find there are other controlling reasons that would convince a state court to adhere to the early decisions of the Supreme Court of Georgia. The first reason relates to the underlying principle of the conditional privilege itself. The fundamental reason for allowing credit reporting agencies to claim the conditional privilege was first enunciated in 1914.
First, this case demonstrates that in one of the states that has refused to grant the privilege, credit reporting agencies exist and are thriving on the credit reporting business. If the basic assumption underlying the rule was correct, presumably there would be no credit reporting agencies in Georgia or Idaho. Additionally, we find that Dun & Bradstreet is not the only credit reporting agency doing a thriving business in Georgia, but there are at least twenty others, one of which is Retail Credit Co., one of the largest such organizations in the United States. Moreover, an empirical study that was prepared comparing credit transactions in Boise, Idaho, where there is no privilege,
A second reason for our decision is that in recent years there has been an apparent shift in emphasis from the protection of the credit reporting agency to the protection of the individual or business enterprise being investigated. The growth in consumer protection in regard to credit reporting is obvious from legislation such as the Fair Credit Reporting Act (FCRA). 15 U.S.C.A. §§ 1681-1681t (Supp.1971). Pursuant to the FCRA, the credit agency must disclose to the consumer the substance and sources of information upon its demand, id. § 1681d, the consumer has a right to correct and explain information contained in the report, id. § 1681i, and it may limit access to those who have a "legitimate business need." Id. § 1681b(3)(E). Furthermore, the Act does not preclude an action at common law except where information that would give rise to a cause of action is obtained by the complainant pursuant to the provisions of the Act. Id. § 1681h(e).
In an action for libel under Georgia law, the plaintiff must specifically allege, F.R.Civ.P. 9(g), and prove special damages where the defamatory statement is not libel per se. Mell v. Edge, 68 Ga.App. 314, 22 S.E.2d 738, 739 (1942). Special damages are those damages that "actually flowed from the
Plaintiff specifically alleges two grounds upon which he might prove special damages. First in Bradstreet Co. v. Oswald, 96 Ga. 396, 23 S.E. 423 (1894), the Georgia Supreme Court categorized as special damages the pecuniary expense incurred by the plaintiff in removing from customers' minds the effect of false statements made in a credit report. Accordingly, plaintiff's complaint specifically alleges that he suffered special damages of incurring pecuniary loss in terms of total hours expended in removing from the minds of certain business associates the harmful effect of the false statements. Plaintiff elaborated in his answers to defendant's interrogatories, responding to the effect that it was necessary for him to contact several persons, including a bonding company, an insurance agent and a banker in order to procure letters of reference, and an accountant for true and correct financial information. Furthermore, plaintiff was required on two occasions to confer with representatives of Dun & Bradstreet, consult with his personal attorney, and to contact various persons associated with certain oil companies, for which he constructed gasoline filling stations, in order to convince them of his true credit standing and to urge that they again place his name on their lists of bid invitees from which it might have been removed.
Second, plaintiff asserts that the flow in his business has decreased without any specific reference to customers or construction projects. The requirement of special damages is also satisfied where "the plaintiff can, under the circumstances, only know that the flow of his business as a whole is diminished, and it would be impossible to point to any specific customers, or orders which have been lost . . . ." C. McCormick, Damages 422 (1935). Plaintiff contends that he knows he has suffered such a loss based upon information derived from plaintiff's books kept in the ordinary course of business. Therefore, the alleged injury sustained is specifically plead by plaintiff and affords him at least the opportunity to prove to the jury that he has sustained special damages.
To justify remanding this case for trial, it was necessary for us to point out that there were allegations in the pleadings and answers to interrogatories to support plaintiff's ability to prove special damages, a prerequisite to any recovery where the statement is not libelous per se. It would be premature, however, to further discuss plaintiff's claims for damages. The measure of general damages that is presumed by law is limited only by the sole discretion of the jury absent bias or prejudice. Brown v. Autry, 78 Ga. 753, 3 S.E. 669 (1887). Malice, necessary to support an award of punitive damages, is inferred by law from the character of the defamation where there is an absence of lawful excuse or the absence of a privilege. Ga.Code Ann. §§ 105-2002, 105-2003 (1935); see Atlanta Journal Co. v. Doyal, 82 Ga.App. 321, 60 S.E.2d 802 (1950). Furthermore, where the plaintiff proves by satisfactory evidence that the "defendant has acted in bad faith, or has been stubbornly litigious, or where he has caused the plaintiff unnecessary trouble and expense," the jury may award the expenses of litigation. Ga. Code Ann. § 20-1404 (1935); see Atlanta Journal Co. v. Doyle, supra.
Because there are sufficient facts indicating that plaintiff might have been able to prove special damages and thereby recover for injury incurred as a result of publication of the libelous
AINSWORTH, Circuit Judge (dissenting):
Both plaintiff and defendant moved the court for summary judgment contending that there was no genuine issue of material fact and that judgment as a matter of law was required. The district judge, however, sustained defendant's motion for summary judgment and held that the Dun & Bradstreet report was conditionally privileged on the basis of Ga.Code Ann. § 105-709, and that the uncontroverted evidence showed the credit statement which pertained to plaintiff was published without malice and was properly issued to eleven subscribers of defendant. The court found that the evidence was insufficient to raise a jury question.
I am in agreement with the reasons expressed by the district judge in his detailed order granting defendant's motion for summary judgment. I also agree with the district court that the ancient Georgia cases of Johnson v. The Bradstreet Co., 77 Ga. 172 (1886) and Western Union Telegraph Co. v. Pritchett, 108 Ga. 411, 34 S.E. 216 (1899), rendered 87 and 74 years ago, are based upon odd reasoning, are distinguishable on their facts, and should not be followed. We are not bound under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to give blind allegiance to these decisions. See Shelp v. National Surety Corporation, 5 Cir., 1964, 333 F.2d 431; Union Bank & Trust Co. of Mt. Holley, N. J. v. First Nat. Bank, 5 Cir., 1966, 362 F.2d 311. See also Peacock v. Retail Credit Company, 5 Cir., 1970, 429 F.2d 31.
The majority concedes that practically all of the states of this country afford a conditional privilege to credit reports published in limited fashion to subscribers. Only Georgia and Idaho are said to be to the contrary. I am unpersuaded by the majority opinion that the reasons which underlie the decisions of the many states which grant a conditional privilege to credit reports are insupportable or that contemporary notions no longer favor the privilege.
Since I believe the district court's decision should be affirmed, I respectfully dissent.
ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC
Before GOLDBERG, AINSWORTH and INGRAHAM, Circuit Judges.
The Petition for Rehearing is denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is denied.
AINSWORTH, Circuit Judge (dissenting):
I dissent from the denial of the petition for rehearing.