Dun & Bradstreet v. Greenmoss Builders

Citation: Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749 (1985)(full-text).

Factual Background
Dun & Bradstreet, Inc., a credit reporting agency, provides subscribers with financial and related information about businesses. All the information is confidential; under the terms of the subscription agreement the subscribers may not reveal it to anyone else. On July 26, 1976, Dun & Bradstreet sent a report to five subscribers indicating that Greenmoss Builders, Inc., a construction contractor, had filed a voluntary petition for bankruptcy. This report was false and grossly misrepresented respondent's assets and liabilities. That same day, while discussing the possibility of future financing with its bank, Greenmoss Builders’ president was told that the bank had received the defamatory report. He immediately called Dun & Bradstreet’s regional office, explained the error, and asked for a correction. In addition, he requested the names of the firms that had received the false report in order to assure them that the company was solvent. Dun & Bradstreet promised to look into the matter but refused to divulge the names of those who had received the report.

After determining that its report was indeed false, Dun & Bradstreet issued a corrective notice on or about August 3, 1976, to the five subscribers who had received the initial report. The notice stated that one of Greenmoss Builders’ former employees, not respondent itself, had filed for bankruptcy and that Greenmoss Builders continued in business as usual. Greenmoss Builders told Dun & Bradstreet that it was dissatisfied with the notice, and it again asked for a list of subscribers who had seen the initial report. Again Dun & Bradstreet refused to divulge their names.

Trial Court Proceedings
Greenmoss Builders brought a defamation action in Vermont state court. It alleged that the false report had injured its reputation and sought both compensatory and punitive damages. The trial established that the error in Dun & Bradstreet's report had been caused when one of its employees, a 17-year-old high school student paid to review Vermont bankruptcy pleadings, who had inadvertently attributed to Greenmoss Builders a bankruptcy petition filed by one of Greenmoss Builders’ former employees. Although Dun & Bradstreet's representative testified that it was routine practice to check the accuracy of such reports with the businesses themselves, it did not try to verify the information about Greenmoss Builders before reporting it.

After trial, the jury returned a verdict in favor of Greenmoss Builders and awarded $50,000 in compensatory damages and $300,000 in punitive damages. Dun & Bradstreet moved for a new trial. It argued that in Gertz v. Robert Welch, Inc., the U.S. Supreme Court had ruled broadly that "the States may not permit recovery of presumed or punitive damages, at least when liability is not based on a showing of knowledge of falsity or reckless disregard for the truth," and it argued that the judge's instructions in this case permitted the jury to award such damages on a lesser showing.

The trial court indicated some doubt as to whether Gertz applied to "non-media cases," but granted a new trial because of dissatisfaction with its charge and conviction that the interests of justice required it.

State Supreme Court Proceedings
The Vermont Supreme Court reversed. Although recognizing that in certain instances the distinction between media and non-media defendants may be difficult to draw, the court stated that no such difficulty is presented with credit reporting agencies, which are in the business of selling financial information to a limited number of subscribers who have paid substantial fees for their services. Relying on this distinguishing characteristic of credit reporting firms, the court concluded that such firms are not the type of entity worthy of First Amendment protection. It held that the balance between a private plaintiff's right to recover presumed and punitive damages without a showing of special fault and the First Amendment rights of "non-media" speakers "must be struck in favor of the private plaintiff defamed by a non-media defendant." Accordingly, the court held that as a matter of federal constitutional law, the media protections outlined in Gertz were inapplicable to non-media [defamation]] actions."

U.S. Supreme Court Proceedings
Although unable to agree on an opinion, five members of the Court agreed that the rule of Gertz does not apply where the false and defamatory statements involved do not involve matters of public concern. In addition, five members of the court agreed that in the area of defamation law, the rights of the institutional media under the First Amendment are no greater and no less than those enjoyed by other individuals or organizations engaged in the same activities.

Justice Powell announced the judgment of the court and, in an opinion joined by Justices Rehnquist and O'Connor expressed the view that the First Amendment interest in speech of matters of purely private concern is less than that for matters of public concern, such as those which were involved in the Gertz case, and does not outweigh the state interest in awarding presumed and punitive damages for defamation.

Justice Burger concurred in the judgment, expressing the view that the Gertz decision should be overruled, and that, in any event, it was limited to circumstances in which the alleged defamatory expression concerns a matter of general public importance.

Justice White concurred in the judgment, expressing the view that the Gertz decision should be overruled, and in any event should not be applied in this case because the defamatory publication involved did not deal with a matter of public importance. Justice White also expressed the view that the First Amendment gives no more protection to the press in defamation suits than it does to others exercising their freedom of speech.

Justice Brennan joined by Justice Marshall, Justice Blackmun, and Justice Stevens, dissented, expressing the view that the Gertz rule applies to any false statements regardless of whether or not they implicate a matter of public importance. They also expressed that the rights of the institutional media under the First Amendment are no greater and no less than those enjoyed by other individuals or organizations engaged in the same activities.