Amicus Curiae Brief — Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc.

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

DUN & BRADSTREET, INC.,

Petitioner,

V.

GREENMOSS BUILDERS, INC.,

Respondent.

On Writ of Certiorari to the

Supreme Court of the State of Vermont

BRIEF OF THE WASHINGTON POST,

AMICUS CURIAE, IN SUPPORT OF REVERSAL

DAVID E. KENDALL

KEVIN T. BAINE *

WILLIAMS & CONNOLLY

839 17th Street, N.W.

Washington, D.C. 20006

(202) 331-5000

Attorneys for Amicus Curiae

* Counsel of Record

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

AVAILABLE COPY ©

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..............-...-------s0ees---0---00000-"

INTEREST OF THE AMICUS ...............------------------0--00--+

SUMMARY OF ARGUMENT ..... sorentinnennetnteniatinieie

PN) |,

I.

II.

ITI.

GERTZ v. ROBERT WELCH, INC. LEFT

OPEN THE QUESTION WHETHER PUNI-

TIVE AND PRESUMED DAMAGES MAY BE

AWARDED IN A DEFAMATION CASE........

PUNITIVE AND PRESUMED DAMAGES

FOR DEFAMATION VIOLATE THE FIRST

AND FOURTEENTH AMENDMENTS ............

THE JUDGMENT IN THIS CASE SHOULD

BE REVERSED ON THE GROUND THAT

DUN & BRADSTREET IS ENTITLED TO

THE MINIMUM PROTECTION IT HAS

ABEEED FOR ....2...222.-2.---0---cccecccecccse-neecnseneseracersoee

TV. CONCLUSION ....-......---.-.---.0cr-ccecereceeosevecneenseees

Page

ii

TABLE OF AUTHORITIES

Cases: Page

AAFCO Heating & Air Conditioning Co. v. North-

west Publications, Inc., 162 Ind. App. 671, 321

N.E.2d 580 (1974), cert. denied, 424 U.S. 913

) | SRE oou Se 23

Beckley Newspapers Corp. Vv. Hanks, 389 U.S. 81

) | ee 23

A.H. Belo Corp. v. Rayzor, 644 S.W.2d 71 (Tex.

FS ee 14

Buckley v. Littell, 589 F.2d 822 (2d Cir. 1976),

cert. denied, 429 U.S. 1062 (1977) ...............--........ 6

Burnett v. National Enquirer, Inc., 7 Media L. Rep.

[BNA] 1821 (Cal. Super. 1981) -......................... 14

Burnett v. National Enquirer, Inc., 144 Cal. App.3d

ee 14

Cantrell v. Forest City Publishing Co., 419 U.S.

| eer 23

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

CRITI cncisntenstnintscnnetsimicnsmmen 22

Curtis Publishing Co. v. Butts, 388 U.S. 130

) | EEE ES ee 11, 18

Davis Vv. Schuchat, 510 F.2d 731 (D.C. Cir. 1975).. 6

Edghill vy. Municipal Publications, Inc., No. 2371

(Pa. Ct. Common Pleas, May Term 1972) ........... 15

Electrical Workers v. Foust, 442 U.S. 42 (1979)... 10

Garrison V. Louisiana, 379 U.S. 64 (1964) _............. 21

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) ....passim

Green V. Alton Telegraph Printing Co., 107 II.

App. 755, 438 N.E.2d 203 (1982) ........................ 13

Greenbelt Cooperative Publishing Ass’n V. Bresler,

SED TLE. © CID cccccisccssscetntnnscnsnsimnenteiiieiaiaaasidammanae 23

Grosjean V. American Press Co., 297 U.S. 233

COD cecaveccereninsentintiinntenentnnitniemnm 22

Hall v. May Dept. Stores, 292 Or. 131, 637 P.2d 126

CID ccecsevecnssiismsipnasatneniisaiameasiainaisesea 20

Henry Vv. Collins, 380 U.S. 356 (1965) .....0. 23

International Security Group, Inc. v. The Outlet

Co., No. 79-CI-10293 (Dist. Ct., 224th Jud. Dist.,

) gg tN ee 16

iii

TABLE OF AUTHORITIES—Continued

Page

Keyishian v. Board of Regents, 385 U.S. 589

i sderiataemusacmtcnanes 18, 19

Landmark Communications, Inc. v. Virginia, 435

EEE AS Se 22

Letter Carriers v. Austin, 418 U.S. 264 (1974) ........ 23

Maheu V. Hughes Tool Co., 384 F. Supp. 166 (C.D.

Cal. 1974), rev’d in part and aff'd in part, 569

i srrsenscenncesoncnee 6, 19

McCoy v. The Hearst Corp., Civ. No. 49915 (Cal.

ee AE ) 12

McHale v. Lake Charles American Press, 390 So.2d

556 (La. App. 1980), cert. denied, 452 U.S. 941

ENE SST EE 20

Mills v. Alabama, 384 U.S. 214 (1966) .................... 21, 22

Minneapolis Star v. Minnesota Commissioner of

Revenue, U.S. , 103 S.Ct. 1865 (1983) .. 22

New York Times Co. v. Sullivan, 376 U.S. 254

a. ccttammemnsonneaes passim

Postill v. Booth Newspapers, 325 N.W.2d 511

ET 13

Pring Vv. Penthouse, International, Ltd., 695 F.2d

488 (10th Cir. 1982), cert. denied, —— USS.

——= 108 S.Ct. 8112 (1988) .................................. 13

Rogers V. Doubleday, 644 S.W.2d 833 (Tex. App.

a sscunesescnsevonce i 15

Rosenblatt v. Baer, 383 U.S. 75 (1966) —........0000000.... 23

Rosenbloom vy. Metromedia, Inc., 403 U.S. 29

SES LT TLL passim

Smith v. Wade, —— U.S. ——, 103 S. Ct. 1625,

I ecemnnened 6, 9, 10, 23

Speiser V. Randall, 357 U.S. 513 (1958) —....000000... 10

Sprague v. Walter, No. 3644 (Pa. Ct. Common

Pleas, April Term 1973) ..................... oD 15

Sprouse v. Clay Communications, Inc., 211 S.E. 2d

674 (W. Va.), cert. denied, 423 U.S. 882 (1975).. 19, 20

Stone Vv. Essex County Newspapers, Inc., 367 Mass.

849, 380 N.E.2d 161 (1975) .................................. 20

Sunward Corp. v. Dun & Bradstreet, Inc., Civil Ac-

tion No. 82-K-147 (D. Colo.) ..................2...22..0....-- 1¢

iv

TABLE OF AUTHORITIES—Continued

Page

Tasket v. KING Broadcasting Co., 86 Wash. 2d 439,

I iiaticiccencstsectcthchicceiineiiescnciidialiaaaiiiin 20

Tavoulareas V. The Washington Post Company, 567

A « f« 6 4 Sn 15

Thornhill v. Alabama, 310 U.S. 88 (1940) ............... 21

Walker v. Colorado Springs Sun, Inc., 188 Colo.,

86, 538 P.2d 450, cert. denied, 423 U.S. 1025

ERTS ETERS ARN ae ee eS Ow AD 23

Rules:

Rules of the Supreme Court of the United States

SLES ares aoe Soe Pe RR Ne Bier eat 1

i 2

United States Constitution:

EE Te TR TT passim

Fourteenth Amendment .....................-- 22 --eeenneenee eee gal 1

Miscellaneous:

Restatement (Second) of Torts § 621, comment d

GIT siisscneicenenietscndeneeisancilisaiiasscitaiianicintacnsiaaniiiiaieaill diladiaiiadilaals 6

Lewis, New York Times v. Sullivan Reconsidered:

Time To Return to “The Central Meaning Of

The First Amendment’, 83 Colum. L. Rev. 603

(RSET apres NRey one AUST Pees en 12

“How Libel Suit Sapped the Crusading Spirit of a

Small Newspaper,” The Wall Street Journal,

I Te CII scccitcittonscesinintiuissnteasamaneneitaiadiasdiliti 17

™~

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No. 838-18

DUN & BRADSTREET, INC.,

Petitioner,

Vv.

GREENMOSS BUILDERS, INC.,

Respondent.

On Writ of Certiorari to the

Supreme Court of the State of Vermont

BRIEF OF THE WASHINGTON POST,

AMICUS CURIAE, IN SUPPORT OF REVERSAL

The Washington Post submits this brief as amicus

curtae in support of petitioner’s claim that the pre-

sumed and punitive damage awards against it violate

the First and Fourteenth Amendments to the Consti-

tution. All parties to this action have given their

written consent to the filing of this brief pursuant to

Rule 36.2 of the Rules of this Court. Copies of the

letters of consent have been filed with the clerk.

INTEREST OF THE AMICUS

Amicus curiae, The Washington Post, publishes a

newspaper of general circulation in the Washington,

D.C. metropolitan area.’ It has been, and is, involved

in a number of libel cases in which punitive and pre-

sumed damages are sought, and one case in which

a plaintiff’s verdict (including punitive damages) was

returned. (The trial judge entered judgment notwith-

standing the verdict in the Post’s favor, and the case

is on appeal. See p. 14, infra.) Because of its in-

volvement in libel litigation in which punitive and

presumed damages are sought, the Post has an inter-

est in the development of the legal principles govern-

ing such claims.

SUMMARY OF ARGUMENT

Both the Vermont Supreme Court and the peti-

tioner in this case have assumed that punitive and

presumed damages may be awarded against the press

upon a showing of “actual malice” under New York

Times Co. v. Sullivan, 376 U.S. 254 (1964), and pro-

ceeded to pose the question whether nonmedia defend-

ants are entitled to the same protection. In fact,

neither Gertz v. Robert Welch, Inc., 418 U.S. 323

(1974), nor any other decision of this Court, estab-

1 The Post is a division of the Washington Post Company,

which has the following subsidiaries or affiliates (excluding

wholly owned subsidiaries): Bowater Mersey Company Ltd.,

Robinson Terminal Warehouse Corp., Los Angeles Times-

Washington Post News Service, International Herald Tribune,

S.A., Bear Island Paper Company (a limited partnership),

The Detroit Cellular Telephone Company (a general partner-

ship), and The Washington-Baltimore Cellular Telephone

Company (a general partnership). This disclosure is made

pursuant to Rule 28.1 of the Rules of this Court.

3

lishes a firm rule for punitive or presumed damages

against the press. Gertz did not hold, or state by way

of dictum, that punitive or presumed damages may

be awarded against any defendant upon a showing

of actual malice. Indeed, there was no separate puni-

tive damage award at all in Gertz, and the case pre-

sented no occasion for the Court to decide whether

punitive damages may ever be awarded against the

press or any other defendant.

Gertz, in short, left open the question sien

punitive or presumed damages may ever be awarded

in a defamation case against the press or against a

member of the public. The issue in this case, then, is

not simply whether there is a basis for distinguishing

between media and nonmedia defendants. The issue

is whether Dun & Bradstreet, a company that pub-

lished certain financial and credit information about

another company, is entitled to the minimum protec-

tion it has asked for—namely, the requirement that

actual malice be shown before punitive and presumed

damages are awarded against it. Amicus agrees that

to deny Dun & Bradstreet that minimum protection,

and to uphold punitive damages on the facts of this

case, would violate the First Amendment.

Dun & Bradstreet has not asked for protection be-

yond the actual malice standard, and there is there-

fore no occasion for the Court to consider whether,

and under what circumstances, additional protection

may be appropriate. It is amicus’ position, however,

that in an appropriate case this Court should hold

that punitive and presumed damages may never be

awarded in a defamation action. Punitive damages

generally, and the unique remedy of presumed dam-

ages in defamation cases, are anomalies of the law.

Committed largely to the uncontrolled discretion of

4

juries, these awards often bear no relationship to ac-

tual harm done. They can be used to punish unpopu-

lar defendants; they encourage unnecessary litiga-

tion; and they chill desirable as well as undesirable

conduct.

In Gertz the Court expressly recognized that these

concerns have special force in defamation cases. The

Court stated further that the states have “no substan-

tial interest in securing for [defamation] plaintiffs

... gratuitous awards of money damages far in ex-

cess of any actual injury.” 418 U.S. at 349. The

logic of Gertz and of the First Amendment itself

points ineluctably to the conclusion that punitive and

presumed damages may never be awarded in defama-

tion cases.

Recent judicial experience with punitive damages

in defamation cases underscores the appropriateness

of such a ruling. Massive punitive damage awards of

over a million dollars have become commonplace. The

fear of these devastating verdicts has chilled the ex-

ercise of First Amendment freedoms and threatened

the very existence of media outlets ill-equipped to

absorb them.

This case does not require the Court to decide

whether punitive or presumed damages may ever be

awarded against a media or normedia defendant, nor

does it require the Court to decide whether there are

some categories of cases in which punitive damages

are inappropriate. The Court need only decide

whether Dun & Bradstreet is entitled to the minimum

protection it has sought in the case—the actual mal-

ice standard. The Court should decide that question

in the affirmative, and leave the remaining questions

concerning punitive and presumed damages to a case

in which they are squarely presented and fully

briefed.

5

ARGUMENT

I. GERTZ v. ROBERT WELCH, INC. LEFT OPEN THE

QUESTION WHETHER PUNITIVE AND PRE-

SUMED DAMAGES MAY BE AWARDED IN A

DEFAMATION CASE

The Vermont Supreme Court saw the “critical is-

sue” in this case as whether the “qualified protections

afforded the media in ‘private’ defamation actions, as

set forth in Gertz, [should] be extended to actions in-

volving nonmedia defendants.” J. App. 37. Like-

wise, the petitioner has framed the issue before the

Court as “whether the First Amendment’s limitations

on the award of presumed and punitive damages for

libel, first enunciated in Gertz v. Robert Welch, Inc.,

. . apply to ‘nonmedia’ defendants.” Petition i.

This framing of the issue is inadequate. It supposes

that the Court has already “enunciated” a rule for

media defendants, and that the only remaining ques-

tion is whether nonmedia defendants are entitled to

the same rule. There is no settled rule, however:

Gertz did not resolve the question whether punitive

or presumed damages may ever be awarded against a

media defendant. This case therefore cannot be de-

cided simply by asking whether there is a basis for

distinguishing between media and nonmedia defend-

ants.

Gertz did not hold that presumed and punitive dam-

ages may be awarded against a media defendant in

favor of a private libel plaintiff upon a showing of

actual malice—that is, knowledge of falsity or reck-

less disregard for the truth. New York Times Co.

v. Sullivan, 376 U.S. 254, 280 (1964). Nor did the

Court in Gertz make that pronouncement by way of

dictum. It noted only that presumed and punitive

damages cannot be recovered by a private libel plain-

tiff when the private plaintiff has not even shown

6

actual malice under New York Times: “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.” 418 U.S. at 349. That is all the Court

had to decide to resolve the damage issue in Gertz,

for the district court and court of appeals agreed

there was no showing of actual malice in Gertz, and

this Court did not disturb that finding. Whether a

private (or public) figure libel plaintiff can recover

presumed or punitive damages when actual malice is

proven is a question that was not before the Court in

Gertz and which preperly was not decided.

Although many lower courts have found in Gertz’s

double negative the implication that punitive dam-

ages are permitted upon a showing of actual malice,

they recognize that the Court has left this question

open. See, e.g., Maheu v. Hughes Tool Co., 569 F.2d

459, 478 (9th Cir. 1978) ; Buckley v. Littell, 539 F.2d

822, 897 (2d Cir. 1976), cert. denied, 429 U.S. 1062

(1977) ; Davis v. Schuchat, 510 F.2d 731 (D.C. Cir.

1975); Restatement (Second) of Torts § 621, com-

ment d (1977). This Court itself seems implicitly to

have acknowledged that the question remains open,

at least with respect to public figure plaintiffs, when

in Smith v. Wade, —— U.S. ——, 103 S.Ct. 1625,

1639 n.19 (1983), it declined to “intimate [a] view

on any First Amendment issues” raised by such

opinions.

Gertz would hardly have been an appropriate case

in which to resolve all issues pertaining to punitive

and presumed damages in defamation cases. The

parties did not brief the issue of punitive or pre-

sumed damages, and there was no separate award of

punitive damages in the case.

7

In Gertz, the Court rejected the view of the plural-

ity in Rosenbloom v. Metromedia, Inc., 403 U.S. 29

(1971), that even a private figure must show actual

malice in challenging a publication on a matter of

public interest. A private individual, the Court held,

is required by the Constitution only to prove fault

by the publisher. That decided the basic issue before

the Court, but the Court did not stop there. It recog-

nized that the logic of its decision, while dictating a

lower standard of liability for private figures, also

required limitations on the types of damages recov-

erable in libel actions—specifically, presumed dam-

ages and punitive damages. The Court opted for a

less rigorous standard of liability for private indi-

viduals “in recognition of the strong and legitimate

state interest in compensating private individuals for

injury to reputation.” 418 U.S. at 348-49. The Court

added, however:

But this countervailing state interest extends no

further than compensation for actual injury. For

the reasons stated below, we hold that the States

may not permit recovery of presumed or puni-

tive damages, at least when liability is not based

on a showing of knowledge of falsity or reckless

disregard for the truth.

Id. at 349 (emphasis added).

The Court was careful not to state that presumed

and punitive damages may be recovered when liability

is based on a showing of actual malice; it simply

stated that at least when, as in Gertz, there is no

proof of actual malice, there can be no presumed or

punitive damages. The ‘Court, in short, cautioned

that the rationale for permitting the recovery of ac-

tual damages upon a showing of fault did not extend

8

to the recovery of presumed and punitive damages.

But the Court did not purport to define what circum-

stances, if any, would warrant the imposition of pre-

sumed or punitive damages.

While Gertz cannot be read to resolve the question

whether punitive and presumed damages may be re-

covered, the reasoning of the Court’s opinion suggests

strongly that punitive and presumed damages shouid

never be awarded. On the subject of presumed dam-

ages, the Court said:

The largely uncontrolled discretion of juries to

award damages where there is no loss unneces-

sarily compounds the potential of any system of

liability for defamatory falsehood to inhibit the

vigorous exercise of First Amendment freedoms.

Additionally, the doctrine of presumed damages

invites juries to punish unpopular opinion rather

than to compensate individuals for injury sus-

tained by the publication of a false fact. More to

the point, the States have no substantial interest

in securing for plaintiffs such as this petitioner

gratuitous awards of money damages far in ex-

cess of any actual injury.

418 U.S. at 349.

The Court’s concern about the impact of punitive

damages upon freedom of expression was made

equally clear:

We also find no justification for allowing awards

of punitive damages against publishers and

broadcasters held liable under state-defined

standards of liability for defamation. In most

jurisdictions jury discretion over the amounts

awarded is limited only by the gentle rule that

they not be excessive. Consequently, juries assess

punitive damages in wholly unpredictable

9

amounts bearing no necessary relation to the ac-

tual harm caused. And they remain free to use

their discretion selectively to punish expressions

of unpopular views. Like the doctrine of pre-

sumed damages, jury discretion to award puni-

tive damages unnecessarily exacerbates the dan-

ger of media self-censorship, but, unlike the for-

mer rule, punitive damages are wholly irrelevant

to the State interest that justifies a negligence

standard for private defamation actions. They

are not compensation for injury. Instead they

are private fines levied by civil juries to punish

reprehensible conduct and to deter its future oc-

currence.

418 U.S. at 350.

The dangers of presumed and punitive damages

could not have been stated more clearly. Both inhibit

the vigorous exercise of First Amendment freedoms

by permitting recovery of massive damage awards un-

related to actual injury. Both invite juries to pun-

ish unpopular speakers and the expression of unpop-

ular views. Indeed, punitive damages in defamation

cases are expressly designed to punish the exercise

of free speech. There is certainly a serious question

whether damage awards fraught with these dangers

can be squared with the Constitutional guarantees of

free speech and free press.

It. PUNITIVE AND PRESUMED DAMAGES FOR DEF-

AMATION VIOLATE THE FIRST AND FOUR-

TEENTH AMENDMENTS

Punitive damages are a disfavored anomaly in any

context. They are unfaithful to the “fundamental

premise of our legal system . . . that damages are

awarded to compensate the victim.” Smith v. Wade,

10

103 S.Ct. at 1641 (Rehnquist, J., dissenting). They

can be used to punish unpopular defendants. Id.; see

Electrical Workers v. Foust, 442 U.S. 42, 50-51 n.14

(1979). Because they are unpredictable and often

enormous, they encourage wanecessary litigation as a

means to gratuitous jackpots. And the threat of ex-

pensive litigation and arbitrary awards can chill not

only undesirable but also “desirable conduct.” Smith

v. Wade, 103 S.Ct. at 1642 (Rehnquist, J., dissenting).

These concerns have special force in the area of

free speech. It is a keystone of First Amendment

jurisprudence that speech must not be “chilled” be-

cause of our “profound national commitment to...

uninhibited, robust, and wide-open” debate. New

York Times Co. v. Sullivan, 376 U.S. at 270. Yet the

very purpose, and the undeniable effect, of punitive

damage awards in defamation cases is to punish and

deter speech. Punitive damages and the First Amend-

ment are thus fundamentally at cross-purposes.

It is no answer to this conflict to say that punitive

damage awards will deter only unprotected speech:

“any system that punishes certain speech is likely to

induce self-censorship by those who would otherwise

exercise their Constitutional freedom.” Rosenbloom

v. Metromedia, 403 U.S. at 64-65 (Harlan, J., dis-

senting). Those with lawful messages to convey

“steer far wider of the unlawful zone” because the

magnitude of the penalty attached to ynprotected

speech is so uncertain and potentially so great.

Speiser v. Randall, 357 U.S. 518, 526 (1958); see

Rosenbloom, 403 U.S. at 82 (Marshall, J., dissenting)

(“the size of the potential judgment that may be ren-

dered against the press must be the most significant

factor in producing self-censorship”). In awarding

11

punitive damages, courts necessarily endorse the chill-

ing of First Amendment liberties.

As noted above, this Court in Gertz expressly rec-

ognized the chilling effect of punitive and presumed

damage awards in defamation cases. See pp. 8-9,

supra. And Gertz is only the most recent of a num-

ber of opinions in which the Justices of this Court

have noted that these awards are constitutionally sus-

pect. In New York Times Co. v. Sullivan, the Court

commented that “the pall of fear and timidity im-

posed [by large damage awards] .. . is an atmos-

phere in which the First Amendment freedoms can-

not survive.” 376 U.S. at 278. Justice Black wrote

in concurrence that “huge verdicts . . . threaten the

very existence” oi a virile press. Jd. at 294. In

Rosenbloom, Justice Harlan abandoned his earlier

conclusion in Curtis Publishing Co. v. Butts, 388 U.S.

130 (1967) (plurality opinion), that the First

Amendment does not in any way limit punitive dam-

ages. With the cautionary remark that “matters are

in flux,” 403 U.S. at 72 n.3, Justice Harlan wrote

that he now thought the Constitution imposed “at a

minimum” two limits on punitive damage awards:

there must be proof that “the speaker acted out of

express malice,” and punitive awards must “bear a

reasonable and purposeful relationship to the actual

harm done.” Jd. at 78, 77 (dissenting opinion; ma-

jority did not address question of punitive damages)

(emphasis added). Justice Marshall and Justice Stew-

art concluded in Rosenbloom that any award of puni-

tive or presumed damages in a defamation case is un-

constitutional, because “the fear of the extensive

awards that may be given . . . must necessarily pro-

duce the impingement on freedom of the press rec-

12

ognized in New York Times.” Id. at 83 (dissenting

opinion ).

Justices Marshall and Stewart later joined the

Court’s opinion in Gertz. Indeed, the votes of these

two Justices, who had previously rejected punitive

and presumed damages altogether, were essential to

the majority in Gertz. The opinion they joined does

not contradict their earlier views. The Court’s state-

ments in Gertz are no more than tentatively worded

dicta which “leave open the possibility that punitive

damages may in time be found too intimidating to

free expression to be allowed at all.” Lewis, New

York Times v. Sullivan Reconsidered: Time To Re-

turn to “The Central Meaning Of The s"irst Amend-

ment”, 83 Colum. L. Rev. 603, 617 (1983).

Justice Harlan, noting that the law with respect to

punitive damages is “in flux,” emphasized twice in

Rosenbloom the importance of “further judicial ex-

perience in this area” before any authoritative rule

could be stated. 403 U.S. at 74, 77. By now the

lessons of experience are clear: in the past few years,

the fear that punitive damage awards could be used

to censor the press has become a reality. When Gertz

was decided in 1974, massive damage awards against

the press were virtually unheard of. Today, they have

become commonplace.

@ In April 1979 a jury returned a verdict of

$4.5 million, including $1.5 million in punitive

damages, against the San Francisco Examiner

and its reporters. The plaintiffs, two policemen

and a prosecutor, had complained of a series of

articles describing their role in securing the con-

viction of a youth on a murder charge. McCoy

vy. The Hearst Corp., Civ. No. 49915 (Cal. Ct.

App., 1st App. Dist., Div. 4). An appeal is pend-

ing.

13

® In May 1980 a jury awarded a county sheriff

$200,000 in compensatory damages and $500,000

in punitive damages against a small local news-

paper, the Ann Arbor News, based on articles

which accused the sheriff of improprieties includ-

ing death threats against one of his deputies,

brutality against private citizens, and the mis-

appropriation of public funds. The verdict was

reversed on appeal on the ground that the evi-

dence could not support a finding of actual mal-

ice. Postill v. Booth Newspapers, 325 N.W.2d

511 (Mich. App. 1982).

© In June 1980 The Alton (Illinois) Telegraph,

a respected publication with a circulation of

38,000 and net worth of about $3 million, was

ordered to pay $9.2 million, including $2.5 mil-

lion in punitive damages, to a local builder be-

cause two of its reporters had written a memo-

randum to a U.S. Justice Department investiga-

tor passing on a tip that the builder was receiv-

ing money from the Mafia in the form of bank

loans. Green v. Alton Telegraph Printing Co.,

107 Ill. App. 755, 488 N.E.2d 203 (1982).

© In February 1981 a federal court jury in Wyo-

ming awarded the astounding sum of $26.5 mil-

lion—$1.5 million in compensatory damages and

$25 million in punitive damages—to a former

beauty pageant winner who complained she was

defamed by a fictional article in Penthouse mag-

azine. This judgment was reduced by the trial

court to $14 million, and reversed by the Court

of Appeals on the ground that Penthouse’s fic-

tional article could not reasonably be understood

as describing any actual facts about the plaintiff.

Pring v. Penthouse, International, Ltd., 695 F.2d

438 (10th Cir. 1982), cert. denied, —— U.S.

——, 103 S.Ct. 3112 (1983).

14

®@ In March 1981 a California jury awarded

$300,000 in compensatory damages and $1.3 mil-

lion in punitives to Carol Burnett, who com-

plained that the National Enquirer falsely re-

ported she had engaged in ijoud and boisterous

behavior in a Washington, D.C. restaurant.

Burnett v. National Enquirer, Inc., 7 Media L.

Rep. [BNA] 1321 (Cal. Super. 1981). The ver-

dict was remitted by the trial court to $800,000

and reduced on appeal to $200,000. Burnett v.

National Enquirer, Inc., 144 Cal.App.3d 991, 193

Cal. Rptr. 205 (1983). A further appeal is

pending.

@ A Texas jury returned a verdict of $1 million

in compensatory damages and $1 million in puni-

tive damages against the publisher of the Dallas

Morning News in a case brought by a benefactor

of a state university who was involved in a con-

troversy over the firing of several faculty mem-

bers and the resignation of the president. The

plaintiff had alleged that his comments on the

controversy were falsely characterized as threats

against university officials. The judgment was

reversed by a court of appeals on the ground that

the allegedly defamatory statements were either

true or protected statements of opinion, and on

the further ground that there was no evidence of

actual malice. A. H. Belo Corp. v. Rayzor, 644

S.W.2d 71 (Tex. App. 1982).

® In July 1982 a Washington Post story that

Mobil President William Tavoulareas had “set

up” his son in a ship management firm resulted

in a $2 million jury verdict, including $1.8 mil-

lion in punitive damages, against the Post. Judg-

ment notwithstanding the verdict was subse-

quently entered in the Post’s favor on the ground

that there was no evidence of actual malice.

15

Tavoulareas v. The Washington Post Company,

567 F. Supp. 651 (D.D.C. 1983). Plaintiff’s ap-

peal is pending.

© A verdict of zero compensatory damages and

$2.5 million punitive damages was entered

against an author and publisher whose book mis-

takenly asserted that the plaintiff had been in-

dicted three times for the unauthorized practice

of optometry. The author had confused plaintiff

with his brother. Rogers v. Doubleday, 644 S.W.

2d 833 (Tex. App. 1982). The case is on appeal

before the Texas Supreme Court.

© In May 1983 a judge entered a verdict of $2

million in compensatory damages and $5 million

in punitive damages in favor of an Atlantic City

hotel owner who claimed that an article in Phila-

delphia Magazine falsely characterized him as a

drug dealer. Edghill v. Municipal Publications,

Inc., No. 2371 (Pa. Ct. Common Pleas, May

Term 1972). Defendant’s motion to recuse the

trial judge is pending on appeal.

® In June 1983 a jury awarded $4.5 million, in-

cluding $3 million in punitive damages, to a for-

mer Philadelphia district attorney, Richard

Sprague, for an article in the Philadelphia In-

quirer raising questions about the propriety of

Sprague’s participation in a homicide case involv-

ing the son of his close friend, a former state

police commissioner. Sprague v. Walter, No.

3644 (Pa. Ct. Common Pleas, April Term 1973).

The Jnquirer’s motion for a new trial is pending.

@ In September 1983 a Texas jury awarded

$600,000 in compensatory damages and $1 mil-

lion in punitive damages against a television

station which reported that a company in the

business of armorplating civilian vehicles for

16

sale principally in Central America was under

investigation by the Bureau of Alcohol, Tobacco,

and Firearms for smuggling guns. International

Security Group, Inc. v. The Outlet Co., No. 79-

CI-10293 (Dist. Ct., 224th Jud. Dist., Bexar Co.).

® Recently, a federal court jury in Colorado

awarded $3.8 million in presumed damages to a

company whose sales and employees were under-

stated in a financial report prepared by the peti-

tioner in this case, Dun & Bradstreet. Sunward

Corp. v. Dun & Bradstreet, Inc., Civil Action No.

82-K-147 (D. Colo.).

To be sure, many of these awards are reduced or

set aside entirely by the trial court or the court of

appeals. But that does not mitigate their chilling ef-

fect. Indeed, the high rate with which these huge

awards are set aside bears out the view that juries

award punitive damages to punish unpopular views

or publications, with indifference to the values of free

speech and free press, and disregard for even the

minimum requirements of the law.

One case dramatically illustrates that the prospect

of securing a reversal or reduction in a punitive dam-

age award is small comfort to a small newspaper

faced with a huge jury verdict. The $9.2 million

judgment against The Alton Telegraph forced the

newspaper into bankruptcy and compelled it to settle

the case before the appeal it had prepared could be

heard. That appeal may well have been meritorious:

it raised the issues whether the complaint, filed seven

years after the allegedly defamatory memorandum

was sent, was barred by the statute of limitations;

whether the memorandum was the legal cause of the

plaintiff’s alleged damages; and whether the memo-

randum, which had been sent to the Justice Depart-

17

ment, was protected by the qualified common law

privilege to report allegations of wrongdoing to law

enforcement officials. Although these arguments may

well have prevailed on appeal, the Telegraph simply

could not afford to pursue them, and chose instead to

settle the case for $1.4 million in order to save itself

from extinction. “(How Libel Suit Sapped the Crusad-

ing Spirit of a Small Newspaper,” The Wall Street

Journal, September 29, 1983, at 1.

Today, The Alton Telegraph still feels the chilling

effect of its libel judgment. Its editor, publisher and

partial owner, Steven A. Cousley, told a Wall Street

Journal reporter:

We are like a tight end who hears footsteps

everytime he runs to catch a pass. . . . Wouldn’t

you be gun-shy if you nearly lost your liveli-

hood and your home?

Id. According to The Wall Street Journal story, the

Alton Telegraph

appears to be shying away from important

stories. When someone called recently with a tip

about misconduct in a sheriff’s office, Steven

Cousley decided against investigating. ‘Let some-

one else stick their neck out this time,’ a reporter

heard him tell an editor. (Asked about the re-

mark, Mr. Cousley says, ‘I probably said that.’)

Id. at 22.

The huge damage awards that juries have returned

in recent defamation cases have unquestionably dis-

couraged the “uninhibited, robust, and wide-open”

inquiry and debate that New York Times Co. v. Sulli-

van was intended to foster. 376 U.S. at 270. These

awards can threaten the very existence of some pub-

7 and they dampen the enthusiasm and vigor

of all.

18

Whether or not a newspaper can survive a suc-

cession of such judgments, the pall of fear and

timidity imposed upon those who would give voice

to public criticism is an atmosphere in which the

First Amendment freedoms cannot survive.

Id. at 278.

Particularly in the light of experience in recent

years, the question must be posed: what legitimate

state interest can justify punitive and presumed dam-

ages awards that have the undeniable effect, and in

the case of punitives the express purpose, of chilling

freedom of speech and of the press? On this point

the language of Gertz is unequivocal. The states have

“no substantial interest in securing for [defamation]

plaintiffs . . . gratuitous awards of money damages

far in excess of any actual injury.” 418 U.S. at 349

(emphasis added). The only “legitimate State inter-

est” in authorizing juries to award damages for def-

amation is “the compensation of individuals.” Jd. at

341. See also id. at 348-49; Rosenbloom, 403 U.S.

at 66 (Harlan, J. dissenting) (“the legitimate func-

tion of libel law must be understood as that of com-

pensating individuals for actual, measurable harm’’) ;

Curtis Publishing Co. v. Butts, 388 U.S. at 153. And

punitive damages are “wholly irrelevant” to that

state interest. Gertz, 418 U.S. at 350.

Because of the impact on protected speech of any

remedy for unprotected speech, state remedies “must

reach no farther than is necessary to protect the le-

gitimate interest involved.” Gertz, 418 U.S. at 349;

see Keyishian v. Board of Regents, 385 U.S. 589, 602-

04 (1967). It is plain, indeed tautological, that per-

mitting recovery of proven actual damages adequately

protects the state’s legitimate interest in compensa-

tion. Punitive and presumed damages are unneces-

19

sary to protect that interest and are therefore un-

constitutional.

Even if the deterrence of unprotected speech were

a “legitimate function of libel law,” Rosenbloom, 403

U.S. at 66 (Harlan, J., dissenting)—and no opinion

of this Court suggests that it is—unprotected defam-

atory speech is effectively and sufficiently deterred by

“the very possibility of having to engage in litigation,

an expensive and protracted process,’ Rosenbloom,

403 U.S. at 52, and by the threat of compensatory

damage awards. Thus in Sprouse v. Clay Communi-

cations, Inc., 211 S.E. 2d 674, 692 (W. Va.), cert.

denied, 423 U.S. 882 (1975), the West Virginia Su-

preme Court of Appeals rejected punitive damages on

the ground that actual damages were “adequate for

the purpose of dissuading publishers from similar

willful and reckless conduct in the future.” See also

Maheu v. Hughes Tool Co., 384 F.Supp. 166, 170-71

(C.D.Cal. 1974), rev’d in part and aff'd in part, 569

F.2d 459 (9th Cir. 1978). Assuming, arguendo, that

there could be a legitimate state interest in providing

an additional measure of punishment or deterrence in

some cases, the present system of punitive damage

awards is intolerable because punitive damages, “lim-

ited only by the gentle rule that they not be exces-

sive,’ Gertz, 418 U.S. at 350, are not narrowly tai-

lored to promoting that interest. See, e.g., Keyishian

v. Board of Regents, 385 U.S. at 602-04. Punitive

damages are unpredictable in amount and often dis-

proportionate to any harm actually done or reasonably

foreseen. The largely uncontrolled discretion of juries

to award punitive damages itself renders them un-

suitable instruments to control unprotected speech,

because the terror they inspire chills protected speech

as well.

20

In the final analysis, damage awards whose very

purpose is to punish speech have no place in a

system that values and protects freedom of speech—

and punitive and presumed damage awards which

threaten the vigor and, in some cases, the very ex-

istence of the press, cannot be reconciled with a sys-

tem that values and protects freedom of the press.

Punitive and presumed damages, in short, cannot be

squared with the First Amendment.’

Ill. THE JUDGMENT IN THIS CASE SHOULD BE RE-

VERSED ON THE GROUND THAT DUN & BRAD-

STREET IS ENTITLED TO THE MINIMUM PRO-

TECTION IT HAS ASKED FOR

There are, amicus submits, a number of open ques-

tions concerning the availability of punitive and pre-

2 Three states have held that the First and Fourteenth

Amendments bar punitive damages for libel plaintiffs who

recover acequate compensatory damages. Sprouse v. Clay

Communications, Inc., 211 S.E.2d at 692; McHale v. Lake

Charles American Press, 390 So.2d 556 (La. App. 1980), cert.

denied, 452 U.S. 941 (1981); Stone v. Essex County News-

papers, Inc., 367 Mass. 849, 859-60, 330 N.E.2d 161, 169

(1975). The Supreme Judicial Court of Massachusetts rested

its holding on both state and federal constitutional grounds:

We reject the allowance of yunitive damages in this

Commonwealth in any defamation action, on any state of

proof, whether based on negligence, or reckless or wilful

conduct. We so hold in recognition that the possibility

of excessive and unbridled jury verdicts, grounded on

punitive assessments, may impermissibly chill the exer-

cise of First Amendment rights by promoting apprehen-

sive self-censorship.

367 Mass. at 859-60, 330 N.E.2d at 169.

At least two states have held that punitive damages in

libel cases are barred by the free speech and free press guar-

antees of their own constitutions. Hall v. May Department

Stores, 292 Or. 181, 687 P.2d 126 (1981); Tasket v. KING

Broadcasting Co., 86 Wash. 2d 439, 546 P.2d 81 (1976).

21

sumed damages in libel cases, but they need not and

should not all be resolved in this case. As the fore-

going discussion demonstrates, there is a serious ques-

tion whether punitive and presumed damages should

ever be allowed in a defamation case. If they were to

be approved under any circumstances, there would

certainly arise the troubling question whether they

should ever be permitted against speech that touches

upon public affairs or matters of public interest.*

* This Court has often said that speech concerning public

affairs and public issues is at the core of the First Amend-

ment’s protection. See, e.g., Mills v. Alabama, 384 U.S. 214,

218 (1966) (“a major purpose of [the First] Amendment was

to protect the free discussion of governmental affairs”) ;

Garrison V. Louisiana, 379 U.S. 64, 74-75 (1964) (“[S]peech

concerning public affairs is more than self-expression; it is

the essence of self-government.”); New York Times Co. Vv.

Sullivan, 376 U.S. at 270 (“debate on public issues should be

uninhibited, robust, and wide-open”). And the Court has em-

phasized that “[f]reedom of discussion, if it would fulfill its

historic function in this nation, must embrace all issues about

which information is needed or appropriate to enable the

members of society to cope with the exigencies of their pe-

riod.” Thornhill v. Alabama, 310 U.S. 88, 102 (1940). In

Rosenbloom v. Metromedia, a plurality of this Covrt con-

cluded that publications on matters of public interest and con-

cern should receive the benefit of the New York Times stand-

ard for recovery of compensatory damages. The Court re-

jected that view in Gertz, because it abridged to an unac-

ceptable degree the state’s interest in providing “a legal rem-

edy for defamatory falsehood injurious to the reputation of a

private individual.” 418 U.S. at 346. But that interest in

compensating individuals who are defamed cannot justify an

award of punitive damages. Nor can any state interest jus-

tify a damage award intended to punish speech on a matter

of public interest and concern.

In Gertz the Court expressed concern about calling upon

judges to determine “which publications address issues of

22

There may be a question, as the Petition for Certio-

rari puts it, whether there is a basis for distinguish-

ing between the press and the rest of the public when

it comes to punitive damages.* There may also be a

question whether, if punitive damages were to be

allowed, proof in addition to knowledge of falsity or

‘general or public interest’ and which do not.” 418 U.S. at

846. The line may be difficult (and in some contexts danger-

ous) to draw, and that difficulty may be an additional reason

to prohibit punitive damages altogether.

¢ As this Court recently emphasized, the explicit guarantee

of freedom of the press was important to the Framers. Min-

neapolis Star v. Minnesota Commissioner of Revenue,

U.S. ——, 103 S. Ct. 1365, 1871 (1983). In tha. case and

many others, the Court has emphasized the special role that

the press plays in informing the public and guaranteeing that

government is responsive to the public’s will. See, e.g., Land-

mark Communications, Inc. v. Virginia, 435 U.S. 829, 840

(1978) ; Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 491-92.

(1975) ; Mills v. Alabama, 384 U.S. at 219; Grosjean v. Amer-

ican Press Co., 297 U.S. 233, 250 (1936). That is not to say

that members of the public, who enjoy the protection of the

free speech provision of the First Amendment, should not enjoy

full protection against punitive and presumed damage awards

for defamation. Certainly there could be no basis for dis-

tinguishing between the established press and the lonely

pamphleteer in defining the media for purposes of defamation

law. Moreover, any line between media and nonmedia de-

fendants in defamation cases would be a troubling and poten-

tially mischievous one, which could effectively limit the diver-

sity of viewpoints and information available to the public.

Dun & Bradstreet apparent'y does not argue for media status,

but as its own information business illustrates, information

that is of insufficient general interest to warrant publication

in the mass media may still be of vital importance to a small

.ment of the public.

23

reckless disregard for the truth should be required—

namely, ill will, spite or hatred.°

The Court need not resolve these issues in this case.

Dun & Bradstreet, a company that published certain

financial and credit information about another com-

pany, seeks the protection of the actual malice stand-

ard to the extent that punitive and presumed damages

are at issue. Surely it is entitled to no less protection

than that, and the Court should so hold. Punitive

5 In Smith v. Wade, the Court expressly declined to intimate

any view on the First Amendment issues raised by decisions

permitting punitive damage awards in favor of a public offi-

cial or public figure upon the showing of actual malice re-

quired for the recovery of compensatory damages. 103 S. Ct.

at 1639 n.19. In his Rosenbloom dissent, Justice Harlan ex-

pressed the view that punitive damages should not be per-

mitted unless “the plaintiff has proved that the speaker acted

out of express malice.” 403 U.S. at 77 (emphasis added).

Such proof—that the speaker was motivated by ill will or

personal animus—is quite different from proof of “actual

malice” under New York Times. See, e.g., Letter Carriers v.

Austin, 418 U.S. 264, 281-82 (1974); Greenbelt Cooperative

Publishing Ass’n Vv. Bresler, 398 U.S. 6 (1970); Beckley

Newspapers Corp. V. Hanks, 389 U.S. 81, 82 (1967) ; Rosen-

blatt v. Baer, 383 U.S. 75, 84 (1966); Henry v. Collins, 380

U.S. 356 (1965). Requiring such proof of bad motive would

comport with “the common-law standard of ‘malice’ generally

required under state tort law to support an award of punitive

damages.” Cantrell v. Forest City Publishing Co., 419 U.S. 245,

252 (1974), and might provide some additional protection

against unwarranted punitive damage awards. Two states have

held that punitive damages are barred by their constitutions

unless there is proof that the publisher acted with actual hatred

or ill will. AAFCO Heating & Air Conditioning Co. v. North-

west Publications, Inc., 162 Ind. App. 671, 321 N.E.2d 580

(1974), cert. denied, 424 U.S. 918 (1976); Walker v. Colo-

rado Springs Sun, Inc., 188 Colo. 86, 538 P.2d 450, cert. de-

nied, 423 U.S. 1025 (1975).

24

damages for defamatory falsehoods should never be

permitted upon facts of the sort deemed sufficient by

the Vermont Supreme Court in this case—that Dun

& Bradstreet’s employee “inadvertently” mistook the

bankruptcy of a former Greenmoss employee for the

bankruptcy of Greenmoss itself, and thai Dun &

Bradstreet failed to adhere to its routine practice of

prepublication verification. J. App. 35. That may be

evidence of negligence, but not evidence that war-

rants the imposition of punitive damages under any

standard compatible with the First Amendment. The

Court should hold that Dun & Bradstreet is at least

entitled to the minimum protection against punitive

and presumed damages it has asked for—namely, the

actual malice standard of New York Times—and it

should leave the remaining questions concerning puni-

tive and presumed damages to a case in which they

are squarely presented and fully briefed.

IV. CONCLUSION

For the foregoing reasons, the judgment of the Su-

preme Court of Vermont should be reversed.

Respectfully submitted,

Davip E. KENDALL

KEVIN T. BAINE

WILLIAMS & CONNOLLY

839 17th Street, N.W.

Washington, D.C. 20006

(202) 331-5000

Attorneys for Amicus Curiae