Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc.

PETITIONER:Dun & Bradstreet, Inc.
RESPONDENT:Greenmoss Builders, Inc.
LOCATION:The D&B Corporation

DOCKET NO.: 83-18
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: Vermont Supreme Court

CITATION: 472 US 749 (1985)
REARGUED: Oct 03, 1984
DECIDED: Jun 26, 1985
ARGUED: Mar 21, 1984

ADVOCATES:
Gordon Lee Garrett, Jr. – on behalf of Petitioner
Thomas F. Heilmann – on behalf of Respondent

Facts of the case

Dun and Bradstreet, a credit reporting agency, mistakenly reported to some of its subscribers that the construction contractor Greenmoss Builders had voluntarily filed for bankruptcy. The president of Greenmoss quickly learned about the erroneous report, requested Bradstreet to correct its error, and asked for the list of subscribers who received the report. Bradstreet refused to release the names on the list, but issued a correction to its five subscribers who received the original report. The correction stated that actually a former employee of Greenmoss had filed for bankruptcy and that Greenmoss Builders “continued in business as usual.” Greenmoss was dissatisfied with the correction and again asked for the list. When Bradstreet refused a second time, Greenmoss filed suit against it for defamation in a Vermont state court. The court discovered that a 17-year-old high student interning for Bradstreet had caused the error and the jury awarded $350,000 to Greenmoss in compensatory and punitive damages. Bradstreet claimed that contrary to the Supreme Court’s ruling inGertz v. Robert Welch, the trial judge told the jury that it could award punitive damages even if Bradford did not make mistakes intentionally or out of recklessness. The court granted Bradstreet’s motion for retrial, but the Vermont Supreme Court ruled thatGertz only applied to cases involving defamation by the media.

Question

If a trial judge does not instruct the jury to only award punitive damages caused by intentional slander or reckless conduct, can a jury still award punitive damages to a plaintiff defamed by private speech?

Warren E. Burger:

We will hear arguments next in Dun & Bradstreet against Greenmoss Builders, Incorporated.

Mr. Garrett, I think you may proceed when you’re ready.

Gordon Lee Garrett, Jr.:

Mr. Chief Justice and may it please the Court:

The issue before you today is whether the First Amendment’s limitations on presumed and punitive damages apply to non-media defendants in actions for defamation.

Petitioner Dun & Bradstreet has urged the Court to confirm that the First Amendment protects all speech against the award of presumed and punitive damages, absent actual malice.

William H. Rehnquist:

Mr. Garrett, would suggest that we would be ratifying what someone else has already said is correct.

Who is that someone else?

Gordon Lee Garrett, Jr.:

Fully recognizing, Your Honor, the footnotes in several opinions dealing with private defamation, we believe that this Court’s opinion in Gertz versus Robert Welch leads to the inescapable conclusion that on the one hand the states have no substantial interest in awarding presumed and punitive damages against any speech when balanced against the First Amendment protections.

We believe that’s why the word “confirm” is appropriate.

Warren E. Burger:

I’m not sure I track what you mean when you say private defamation.

Gordon Lee Garrett, Jr.:

Your Honor, I agree with you.

I think in this Court’s opinions “private defamation” has been used to signify the status of the plaintiff, from a public figure, to a public official, to a private figure.

But defamation by definition includes a publication to a third party.

I think Your Honor is correct that there really is no such thing as private defamation.

When I speak of private defamation in this case, I am really referring to a private party, not a public figure or a public official.

We believe a ruling which would–

Warren E. Burger:

I thought perhaps you had it the other way around, that there is some concept that a private party does not share all the protections that all other persons share under the First Amendment.

Gordon Lee Garrett, Jr.:

–Absolutely not, Your Honor.

We believe that the decisions of this Court recognize that the First Amendment is a freedom which is enjoyed by all, and that this Court doesn’t make distinctions based on the speaker or his message in connection with defamation cases.

We believe that a ruling recognizing that neither presumed nor punitive damages could be allowed, absent actual malice, would do two very important things.

First, it would recognize the very legitimate and important state interest in protecting the reputational interests of citizens by allowing private defamation plaintiffs to recover damages for actual injury.

William H. Rehnquist:

Well, that isn’t the result of any limitation.

That’s the result of the basic state general damage award.

Gordon Lee Garrett, Jr.:

I’m sorry, Justice Rehnquist?

William H. Rehnquist:

I thought you were saying the reasons why we should have this limitation on the states’ authority are two, and one is the state ought to do what it isn’t limited to do by this limitation.

Gordon Lee Garrett, Jr.:

No, Your Honor.

My point was that if you recognize the rule which we suggest in our case you would do two different things: One, you would recognize that the states have an interest in protecting the reputations of their citizens, and that interest is satisfied by awarding damages for actual injury.

The second point is that it would also recognize that, absent actual malice, the states have no interest in awarding either presumed or punitive damages, and that when balanced against the First Amendment freedoms it precludes such an award.

Let me emphasize that Dun & Bradstreet seeks only the same result that would be required in actions brought against newspapers, television, syndicated columnists.

Whatever the term “media” means, we believe that all citizens are entitled to that freedom under the First Amendment.

Gordon Lee Garrett, Jr.:

As I mentioned earlier, we believe that that ruling would flow naturally from the Court’s holding in Gertz versus Robert Welch, which significantly recognized that the states have no interest in securing for defamation plaintiffs gratuitous awards of money damages far in excess of any actual injury.

We believe the highlights of the case before the Court recognize the very concerns which troubled this Court in Gertz: jury awards of presumed and punitive damages in wholly unpredictable amounts, bearing no relationship to the actual harm caused.

William H. Rehnquist:

Well, why are these damage awards so much different than awards in personal injury cases?

They’re all going up nowadays.

Why shouldn’t they go up against libel defendants, too?

Gordon Lee Garrett, Jr.:

Some of my colleagues at the libel bar would agree with you, Your Honor, that they are going up.

There is one fundamental difference.

In the case before the Court, where there was libel per se charged, the jury was instructed that damages are presumed.

Other torts do not allow a court to give presumed damages.

I should not say “allow”.

States do not give damages for presumed injury.

William H. Rehnquist:

You have to prove the element of damage?

Gordon Lee Garrett, Jr.:

That’s correct.

And in an ordinary negligence case, for example, one of the key elements is injury, and that is why.

Plus… and I tend to forget this, too… we are balancing defamation laws against a corresponding First Amendment right, and in ordinary negligence cases there is not even that corresponding First Amendment right except as due process would require.

William H. Rehnquist:

Your client isn’t exactly in the position of the New York Times in New York Times against Sullivan, where the Court talks about the dangers of self-censorship and that sort of thing.

Really, no great social harm would be done if Dun & Bradstreet did a little self-censorship when it comes to defaming people’s business reputations, would it?

Gordon Lee Garrett, Jr.:

I think, Your Honor, that it’s important to focus on what chilling effect it would have on Dun & Bradstreet.

I do not mean to suggest to the Court that Dun & Bradstreet is going to go out of business.

In fact, it’s been in business for a number of years.

But I think we must look, Your Honor, at two interests, one in the interest of the free flow of information generally, and secondly the interest in the recipients of Dun & Bradstreet reports to get prompt, accurate information.

And let me be specific.

If Dun & Bradstreet or any other non-media speaker, whatever that means, is subject to unlimited awards for presumed and punitive damages, I think two things will happen.

One, rather than publish something that cannot be triple checked and guaranteed, that information simply will not be published.

For example, Dun & Bradstreet will oftentimes include in its reports information about how a creditor thinks a particular corporation or proprietorship pays its bills.

Now, when that person that is the subject of the report calls Dun & Bradstreet and says, I don’t agree with you, I was not slow 90 days, and then Dun & Bradstreet calls the creditor to check that information and they say, well, we believe that’s correct, but it’s in our files, we can’t be sure, if Dun & Bradstreet is subject to unlimited awards, they simply won’t publish that.

And it’s important in the free flow of commercial information that the recipients of those reports know that.

William H. Rehnquist:

Know what?

Gordon Lee Garrett, Jr.:

Know the fact that someone is slow pay, know the fact–

William H. Rehnquist:

Even though the creditor wouldn’t corroborate?

Gordon Lee Garrett, Jr.:

–What I’m saying is, Your Honor, he may have sent magnetic tapes to Dun & Bradstreet which are no longer in existence.

It may take three or four weeks to corroborate.

And it’s important to get that information out.

William H. Rehnquist:

Well, but is that really more important than making sure someone in the Respondent’s position here isn’t false accused of having filed bankruptcy?

Gordon Lee Garrett, Jr.:

I agree, Your Honor, that it is very important that we recognize the reputational interest of our citizens.

And I think the Court struck the appropriate balance when in the Gertz case it says private defamation plaintiffs may be compensated for their actual injury.

In this case, plaintiffs defamed are entitled to compensation for actual injury.

Our problem with this case is that the jury was told that damages were presumed, period.

They need not prove actual damages.

And I agree with Your Honor that it’s important–

Sandra Day O’Connor:

But the jury was also told that they had to find malice or lack of good faith to find any damages at all.

Gordon Lee Garrett, Jr.:

–That was based, Your Honor, on the Vermont qualified privilege, not on a constitutional standard.

Sandra Day O’Connor:

What difference does it make?

They were instructed.

That was the instruction.

Gordon Lee Garrett, Jr.:

Well, the instruction was faulty because it did not define actual malice in the sense of New York Times versus Sullivan.

It was faulty there.

Sandra Day O’Connor:

Well, that would be lesser.

That’s the issue in the case.

Gordon Lee Garrett, Jr.:

I’m sorry, Justice?

Byron R. White:

Nothing.

Go ahead.

Well, that’s part of the issue in the case, is what kind of malice you have to show to justify punitive damages.

Gordon Lee Garrett, Jr.:

And we believe that the decisions of this Court correctly recognize that that is constitutional malice in the sense of reckless disregard for the truth or knowledge of falsity.

Warren E. Burger:

Was Dun & Bradstreet requested to make a retraction and did they do anything about it?

Gordon Lee Garrett, Jr.:

Yes, sir.

Your Honor, we believe that–

Warren E. Burger:

Did they go the whole way?

Gordon Lee Garrett, Jr.:

–Oh, yes.

We believe the record reflects this: that promptly after the issuance of the special notice which caused… which set forth that Greenmoss Builders had filed a petition in bankruptcy, that when the President of Greenmoss called Dun & Bradstreet, on that very day they issued a correction in the form of a… excuse me, a retraction, in the form of a correction notice.

Warren E. Burger:

Did Dun & Bradstreet let them know who were the recipients of the original false information?

Gordon Lee Garrett, Jr.:

At that time, Your Honor, I do not believe that Dun & Bradstreet did.

Warren E. Burger:

They declined to give it to them.

Gordon Lee Garrett, Jr.:

That’s correct, although they did send that information to the five recipients that did get the original special notice.

That is clear from the record.

Warren E. Burger:

Well, do you think it would be improper for a jury to infer malice from their refusal to let Greenmoss know who received the original false report?

Gordon Lee Garrett, Jr.:

I don’t believe so under this Court’s constitutional standard dealing with focusing on the speaker’s mind at the time of the publication.

This would go to something after the publication was done.

As I was indicating–

Sandra Day O’Connor:

Mr. Garrett, as long as you’re interrupted, may I ask you another question?

Gordon Lee Garrett, Jr.:

–Yes, Your Honor.

Sandra Day O’Connor:

There are federal laws in the securities fields, such as Section 10(b)(5), that govern statements that are made in connection with the sale of securities.

Do you think there’s a First Amendment right for people who are publishing information about securities that has to be considered every time we have a 10(b)(5) action?

Gordon Lee Garrett, Jr.:

Your Honor, I think that would require a different analysis than we have in the defamation area.

As I understand the question, we would be talking about individuals publishing matters who are subject to the control of the SEC, as being licensed, perhaps.

I think that in restraining those types of publications there is a much different focus.

In those cases, I believe the Court is focusing on the recipient of the report rather than the individual identified in the report in defamation cases.

And I think–

Sandra Day O’Connor:

Well, but you’re asking us to recognize a First Amendment right here in connection with the Dun & Bradstreet type of publication, and I’m just wondering if that wouldn’t lead us to having to recognize First Amendment rights in a 10(b)(5) situation or an ordinary fraud situation, anything?

Gordon Lee Garrett, Jr.:

–I do not believe so, Your Honor, because what we are talking here about is the sole issue of speech in context of defamation, not speech in the context of giving advisor’s advice to the SEC.

And as I indicated, I believe a totally different analysis would apply there.

What we are asking the Court to recognize is that the First Amendment protects all speakers against these types of awards, and we do not believe that the state interest varies in securing gratuitous awards of money damages for plaintiffs depending on the speaker or the message.

John Paul Stevens:

Mr. Garrett, may I ask you a question right there?

You seem to treat the case as though there are two kinds of speakers, media speakers and non-media speakers.

You’re in the non-media category and you get all of that.

But yet, in the instructions to the jury you got a special instruction for the privilege for credit reporting agencies, which kind of suggests maybe you’re in a special narrow category.

Up here your opponent argues, yes, you’re in a narrow category and you don’t get all the benefits of other non-media people.

Would you kind of comment on how much you think you’re typical of non-media defendants generally?

You see, they also say this is commercial speech and it’s not something distributed at large, that you don’t need robust debate on whether somebody went into bankruptcy or not.

It’s kind of a different, specialized area.

Gordon Lee Garrett, Jr.:

Your Honor, I must admit that I have a great deal of difficulty in deciding what is “media” and what is non-media.

As we indicate in our reply brief, many of the functions that Dun & Bradstreet does are very analogous to what a newspaper does.

We send reporters out to get information.

The information is edited and sent to clients or prepaid subscribers of Dun & Bradstreet.

The information relates to matters about commerce.

Not much different, we suggest, than what’s in the Wall Street Journal every day or the business page of any newspaper.

Moreover, as I was reviewing the transcript of the case last night, I came across something which struck me, which I think directly goes to your question.

One of the recipients of the Dun & Bradstreet report was the manager of a local bank.

He testified that the bankruptcy notice, which was quickly corrected, had nothing to do with the relationship between the bank and Greenmoss.

But he also said: You know, I look at newspapers because I’m concerned about bankruptcies, and I use newspapers to inform me about that just as well as I do Dun & Bradstreet.

And I think that points out that many of the same functions done by Dun & Bradstreet are done by newspapers and vice versa.

And I believe the second aspect of your question dealt with the commercial speech doctrine.

Your Honor, whatever commercial speech is, it is not speech about commerce.

I don’t think anyone would seriously contend that the statement Greenmoss is bankrupt, if it appeared on page 17 of the Vermont Daily Free Press, was commercial speech.

We were not advertising anything.

We were not promoting any of our products.

This simply is not commercial speech.

And we suggest blur is nothing more than an attempt to get around what we believe to be the central issue in the case, balancing the First Amendment rights of all speakers on the one hand against the states’ limited interest in securing only awards of actual damages for private plaintiffs.

We believe that the facts of this case highlight the very concern the Court recognized in Gertz.

In July 1976 Dun & Bradstreet sent the special notice to five subscribers of Dun & Bradstreet.

None of these subscribers was a customer of Greenmoss, a local building concern.

It did state that Greenmoss had filed a petition in bankruptcy.

As I indicated earlier, a retraction in the form of a correction notice was issued promptly.

The complaint in this case sought damages of $7500 and $15,000 in punitive damages.

Yet, after a two-day trial the jury awarded $50,000 in compensatory damages and $300,000 in punitive damages.

Warren E. Burger:

Do you suggest that there was no evidence?

Did you suggest that before you got here, that there was no evidence to support?

Gordon Lee Garrett, Jr.:

Your Honor, we believe that the evidence showed that plaintiff had not called any recipient of the report to prove that there was a causal connection between the issuance of the report, its receipt, and any damage by Greenmoss.

And in fact, there was no evidence introduced at this trial by anyone establishing a causal connection between the publication of the special notice and the company’s alleged injury and damage.

What we believe this exorbitant verdict resulted from were jury instructions which gave the jury uncontrolled discretion to assess unlimited amounts of damages without regard to actual injury and without regard to Dun & Bradstreet’s state of mind.

Gordon Lee Garrett, Jr.:

The jury was instructed that it was a case of libel per se, damage and loss were conclusively presumed from publication.

The jury, as I indicated previously, was not given the New York Times versus Sullivan actual malice charge and punitive damages in the amount of $300,000 were awarded.

Sandra Day O’Connor:

Well, they were told, though, that they had to find malice or absence of good faith, right?

Gordon Lee Garrett, Jr.:

Your Honor, my recollection on the state law privilege was that they were given several alternatives.

I believe we set that forth on pages 18 and 19 of the joint appendix.

It must show malice or lack of good faith on the part of the defendant.

If the defendant acted in bad faith toward the plaintiff in publishing the report, or that the defendant intended to injure the plaintiff in its business, or that it acted in a willful, wanton or reckless disregard to the interests of the plaintiff, the defendant has acted maliciously and the privilege is destroyed.

Byron R. White:

They never defined “malice” in the New York Times standard or manner?

Gordon Lee Garrett, Jr.:

Let me be clear, Justice White.

They defined “malice” in the state law privilege, and then they also said, but you may award punitive damages if you find actual malice, and the court never defined “actual malice”.

Byron R. White:

In any way?

Gordon Lee Garrett, Jr.:

That is correct, that is correct.

Warren E. Burger:

Was there a request for a definition?

Gordon Lee Garrett, Jr.:

I’m sorry?

Warren E. Burger:

Was there a special request for a definition instruction?

Gordon Lee Garrett, Jr.:

I do not believe that there was a special request.

Warren E. Burger:

Well, a request?

Gordon Lee Garrett, Jr.:

No, sir.

My recollection of what happened at the trial court was that defendant’s counsel moved on directed verdict to dismiss all punitive damages because it had not met the actual actual malice standard of New York Times versus Sullivan.

William J. Brennan, Jr.:

Well, Mr. Garrett, I gather the report was false.

Gordon Lee Garrett, Jr.:

That is correct.

William J. Brennan, Jr.:

And what you felt you were entitled to was an instruction that your client was not to be liable unless it published the falsehood knowing it was false, right, or with reckless disregard to whether it was true or false?

Gordon Lee Garrett, Jr.:

No, Justice Brennan.

All we asked for was… our position in the case is that it is a private figure case and we should have the same protection as the John Birch Society had in the Gertz case, that you cannot award presumed or punitive damages absent the showing in New York Times.

But the plaintiff consistent–

William J. Brennan, Jr.:

Well, I still don’t understand.

What is the form of New York Times instruction you thought you were entitled to?

Gordon Lee Garrett, Jr.:

–We thought, Your Honor, that if the jury was going to be charged on giving punitive damages that they must be given the actual malice standard.

William J. Brennan, Jr.:

Only in relation to the punitive damages?

Gordon Lee Garrett, Jr.:

That is correct, and to be awarded presumed damages.

Gordon Lee Garrett, Jr.:

But that the plaintiff, on the fault standard adopted by the courts in Vermont, should be entitled to receive–

William J. Brennan, Jr.:

Well, on compensatory damages what type of instruction satisfied you?

Gordon Lee Garrett, Jr.:

–Are you talking about damages, Your Honor, or fault?

William J. Brennan, Jr.:

Damages.

Gordon Lee Garrett, Jr.:

We would be satisfied with traditional state law damage charges proper in a libel case, but which did not allow the jury to award presumed damages.

William J. Brennan, Jr.:

Well, but you wouldn’t… well–

Gordon Lee Garrett, Jr.:

Absent a showing of actual malice.

William J. Brennan, Jr.:

–Well, I’m still lost.

You said once or twice you thought that there should have been no damage award whatever, except under instructions that the plaintiff had to prove actual damage.

Well, that’s Gertz, isn’t it?

Gordon Lee Garrett, Jr.:

Yes.

We are arguing, Your Honor, that the Gertz standard for private plaintiffs should have been applied in this case to Dun & Bradstreet, and the jury should not have been allowed to award presumed damages.

Byron R. White:

And you concede that as the case comes to us, at least you concede liability, you concede falsity and you concede fault?

Gordon Lee Garrett, Jr.:

I concede fault under whatever Vermont standard there is.

Byron R. White:

Exactly.

And New York Times is not involved in that.

Gordon Lee Garrett, Jr.:

That is correct, Your Honor.

Byron R. White:

Then it’s just the question of damages, that you think you’re entitled to the New York Times malice instruction if you’re going to presume damages or give punitive damages.

Gordon Lee Garrett, Jr.:

That is absolutely correct.

As I emphasize again–

Byron R. White:

Which is what Gertz said about media defendants.

At least that’s what Gertz said about defendants, and it happens to be that a media was defendant in that case?

Gordon Lee Garrett, Jr.:

–In that case.

I will agree with that, because throughout that opinion we hear the phrase publishers, media.

It may be that the word “speakers” was even used.

Warren E. Burger:

Of course, you are a publisher.

Gordon Lee Garrett, Jr.:

We are absolutely a publisher.

Warren E. Burger:

And you are a media.

You are a medium.

Gordon Lee Garrett, Jr.:

We are a medium of communication, and like an individual in the street is a medium of communication and like the New York Times is a medium of communication.

William H. Rehnquist:

Mr. Garrett, in your colloquy with Justice Brennan and Justice White you stated what instructions you thought you were entitled to under your theory, constitutional theory of the case.

Did you request these instructions from the Superior Court in Vermont?

Gordon Lee Garrett, Jr.:

Let me rephrase that, Justice Rehnquist.

William H. Rehnquist:

Well, I don’t want to rephrase my question.

Gordon Lee Garrett, Jr.:

Oh, no, I’m not.

I just want to turn it to I think give the proper answer to you.

I think our position is not what request that we would have requested, but objections to requests permitting presumed damages.

We objected to a presumed damage charge.

William H. Rehnquist:

Well, doesn’t Vermont follow the rule that most other states follow, that if you want a particular instruction on a question you have to submit it to the court?

Gordon Lee Garrett, Jr.:

I don’t think this was a case of wanting a presumed damage charge, but not wanting a presumed damage charge.

Our point is we don’t think presumed damages should have been charged unless we met the New York Times versus Sullivan actual malice test.

William J. Brennan, Jr.:

No, but did you submit a request for instruction?

Gordon Lee Garrett, Jr.:

Yes, Your Honor.

William J. Brennan, Jr.:

And what was it you asked him to instruct?

Gordon Lee Garrett, Jr.:

In the lower… on the subject of New York Times?

Warren E. Burger:

At the trial.

Gordon Lee Garrett, Jr.:

At the trial court level, my recollection is that the only charge requested by Dun & Bradstreet going to damages was that, if you’re going to charge libel per se, please charge it this way.

There was no charge, Your Honor–

William J. Brennan, Jr.:

“Please charge it this way”?

What’s “this way”?

Gordon Lee Garrett, Jr.:

–The concern was that the trial court–

William J. Brennan, Jr.:

What was the actual request?

Gordon Lee Garrett, Jr.:

–It is set forth, I believe, in the cert petition.

It is Petitioner’s requested charge number three.

And I believe we were in a Hobson’s choice.

We knew that the court was going to charge libel per se.

Our concern was, if you’re going to charge it, which we did not agree with, that at least charge it this way.

And I believe that was the only charge that was given at the lower court level concerning damages, although prior to that the judge had been handed a copy of the Gertz decision in connection with plaintiff’s request that he be allowed to introduce Dun & Bradstreet’s financial statements.

Lewis F. Powell, Jr.:

Are you challenging the $50,000 of actual damages found by the jury?

Gordon Lee Garrett, Jr.:

Yes, we are, Your Honor.

Lewis F. Powell, Jr.:

On what grounds?

Gordon Lee Garrett, Jr.:

Two grounds.

First and foremost, that the jury charge permitted an award of presumed damage, that the plaintiff did not have to prove actual injury.

That we believe alone is sufficient to order a new trial.

In fact, we believe that’s what happened in the Gertz case.

Thurgood Marshall:

Well, you have to go another step: and that they didn’t prove damages.

Gordon Lee Garrett, Jr.:

That’s correct.

Thurgood Marshall:

Don’t you have to prove that, too?

Gordon Lee Garrett, Jr.:

Well, I don’t believe so, because if the jury was allowed to presume damage I think it’s very difficult to tell what in fact–

Thurgood Marshall:

If the evidence showed that the man called up a man and said, I hate this stinker and he just went into bankruptcy, I take it you’d give him damages without a charge?

Gordon Lee Garrett, Jr.:

–Could they give him damages?

Thurgood Marshall:

Yes.

Gordon Lee Garrett, Jr.:

Yes, I think that is correct, Your Honor.

John Paul Stevens:

May I ask–

Gordon Lee Garrett, Jr.:

Yes, Mr. Justice.

Lewis F. Powell, Jr.:

–Your brief refers to $50,000 compensatory damages.

That’s a curious way to describe presumed damages.

Gordon Lee Garrett, Jr.:

That is because of the way it was described in the jury verdict, Your Honor.

We used that phrase because that’s the exact phrase that the jury foreman signed dealing with compensatory and punitive.

John Paul Stevens:

The question I’d like to ask you is, all of the New York Times and Gertz formulas all focus on the state of mind of the defendant at the time the defamation occurred, at the time here we know there was a falsehood.

Would you say that there’s anything in the New York Times line of cases that would prevent the State of Vermont assessing punitive damages for your conduct after the libel occurred, when you refused to give the names of the five people who received it, which might have enabled him to go out and check it out?

Gordon Lee Garrett, Jr.:

If that action was the result of a totally independent tort and that action would sustain an award of presumed damages having nothing to do with the First Amendment, I would agree with Justice Stevens.

But this case was a case based on the First Amendment, based on defamation, and we don’t believe that there is anything in the record which would permit the State of Vermont, consistent with the First Amendment–

John Paul Stevens:

Well, their theory, as I understood it, their theory of malice emphasized, their arguments to the jury and the like, emphasized this conduct as a reason for making you pay a heavy damage award.

Gordon Lee Garrett, Jr.:

–That is correct, and we do not believe that the First Amendment would protect that… would allow that.

What we do say–

John Paul Stevens:

Well, why wouldn’t the First Amendment allow that?

Because I can see how that would be quite important to a businessman, to go around and straighten out his reputation with all these people.

Gordon Lee Garrett, Jr.:

–Because the First Amendment in the defamation area we believe focuses on the defendant’s state of mind when the publication was made.

John Paul Stevens:

But does that immunize?

John Paul Stevens:

If two weeks later he goes out and does a lot of other stuff that’s related to it and is very harmful to the plaintiff, is that also immunized by the First Amendment?

Gordon Lee Garrett, Jr.:

Your Honor, my reading of the First Amendment cases simply would not permit that kind of–

John Paul Stevens:

You see, I haven’t seen a case quite like this before.

Gordon Lee Garrett, Jr.:

–I understand that.

But I don’t believe that it is much different than other cases where in fact you don’t know who’s received it.

I mean, if the New York Times were sued, would it be a good defense at state law to suggest that we don’t know the 500,000 people that got the daily copy of the New York Times?

John Paul Stevens:

No, but here you did know and it was a handful and it could easily have been given and it would have made a lot of difference, I suppose, to the plaintiff.

Gordon Lee Garrett, Jr.:

And as I understand it, Your Honor, the client has changed his policy in that regard, that in fact it is now given out.

Let me suggest one–

John Paul Stevens:

So maybe punitive damages do accomplish something once in a while.

Gordon Lee Garrett, Jr.:

–Your Honor, I would suggest not in this case.

One quick point on what happened in connection with the request.

I believe the record reflects that one request was made for disclosure at the time of the initial contact between plaintiff and defendant’s office.

We said we didn’t have it at that time and no further request was made.

Warren E. Burger:

Do you say that a juror sitting in the box couldn’t say to himself and to the other jurors, their attitude after the original defamation, afterward, relates back and shows that the state of mind all the way through was one of malice?

Gordon Lee Garrett, Jr.:

I do not believe, Your Honor, that that would be consistent with this Court’s teachings in St. Amant versus Thompson.

You look at the subjective actual malice of the speaker at the time.

Thank you very much.

Warren E. Burger:

Mr. Heilmann.

Thomas F. Heilmann:

Mr. Chief Justice and may it please the Court:

It was not until 2:30 this afternoon that we heard for the first time that Dun & Bradstreet claims that it is a media defendant.

They never suggested that in this case before.

So, in response to your question, this case came to the Court as a non-media defendant case, and they never asserted a media defendant position below.

The questions that you asked about the facts I think raise some serious questions about just what went on here and I think show why the Gertz formula should not be used in this type of litigation.

You asked the question, did they retract the whole way?

Well, that was a major part of the trial in this case.

Contrary to what’s been said to you, in this case what happened was, after our client found out about the false report of bankruptcy they asked to find out who the report was submitted to so that they could engage in what Gertz says is the first remedy of a defamed plaintiff, self-help.

And they couldn’t get the answers to those very simple questions until the lawsuit was filed and until discovery was submitted.

So Greenmoss found itself in the position of knowing that this information was being disseminated, but not knowing to whom and not knowing the breadth of the dissemination.

And as the trial indicated, as the president of the company testified at length, he had a bizarre problem.

Thomas F. Heilmann:

Every customer that he visited with, he would not know whether that customer had heard about the bankruptcy.

So he was forced into the awkward position of saying: Do you know that we’re not bankrupt?

That’s a very extraordinary position for a businessman to find himself in.

So I think it is a whole course of conduct.

That’s the way this case was tried.

And with respect to whether Gertz was raised at the trial court level, we submitted some extensive information to the court in our brief about the fact that Gertz was not properly raised.

In this case, the common law privilege was an open question in Vermont and that appeared to be all that Dun & Bradstreet wanted.

They only suggested Gertz as, in their words, “a second rationale” behind the protection that common law extended.

Byron R. White:

Didn’t the Vermont Supreme Court address this issue?

Thomas F. Heilmann:

They addressed it.

We pointed out to the court–

Byron R. White:

Whether or not it was raised in the trial court?

Thomas F. Heilmann:

–That’s right.

But it poses one of the difficulties of getting a clean record to really answer the questions here.

Byron R. White:

Well, I know, but the Vermont court decided it.

Thomas F. Heilmann:

I understand that, Your Honor.

Byron R. White:

They decided the issue and that’s what the argument is here, is whether the Vermont court was right or not–

Thomas F. Heilmann:

I understand that.

Byron R. White:

–as to whether Gertz applies.

Thomas F. Heilmann:

In this case, we don’t think that the issue is properly framed.

What we really think this case is about is credit reports, and we think that these credit reports, which involve only statements of fact, which are made exclusively in the business and financial arena, come within the definition and description of what this Court has called commercial speech.

This case does not present the difficult questions that other commercial speech cases have presented, because we don’t have speech, commercial or otherwise, on public issues, and we don’t have speech that involves the total suppression in advance of speech.

I think common sense is the first test that you can utilize in looking at credit reports as commercial speech, and common sense has led virtually all of the lower federal courts… in fact, in one opinion written by Mr. Justice Clark… to say that commercial credit reports, in fact the same reports that are in this case and the exact same defendant, are commercial speech.

Byron R. White:

You’re suggesting that this kind of speech can certainly libel, but you think the First Amendment is just irrelevant, that this kind of speech just doesn’t deserve First Amendment protection?

Thomas F. Heilmann:

I’m saying it’s commercial speech and you use–

Byron R. White:

Yes, but you’re saying that the First Amendment doesn’t protect it.

Thomas F. Heilmann:

–Because under the commercial speech doctrine the first test is truth or falsity or misleading, and then in this case it clearly is false and misleading.

There is no such tort as the tort of outrageous commercial speech.

Commecial speech gets to the Court in various contexts.

In one case it was the suspension of a lawyer to practice law, the Arala case and the Primus case, that raised the commercial speech question.

Thomas F. Heilmann:

In the last case that the Court handled, the Bolger case, it was the circulation of family planning information that raised commercial speech.

As I’ve indicated, Mr. Justice Clark, writing for the Eighth Circuit in the Millstone-O’Hanlan case, a commercial credit reporting case, said this is commercial speech.

In fact, even in the case that Dun & Bradstreet relies upon, Mr. Justice Douglas’ dissent from Grove versus Dun & Bradstreet’s denial of certiorari, Mr. Justice Douglas says this is commercial speech.

The key here… I think the two qualities that make this commercial speech is that–

Harry A. Blackmun:

Yes, but did he draw a distinction between commercial speech and other speech when he wrote that dissent?

Thomas F. Heilmann:

–He wanted to see what level of constitutional protection, if any, commercial speech should receive.

Harry A. Blackmun:

Well, wasn’t the gist of his dissent, however, that there should be no distinction?

Thomas F. Heilmann:

I think that’s what his position was, but he wanted the Court as a group of nine Justices to handle that question.

Harry A. Blackmun:

Was he right?

Thomas F. Heilmann:

I don’t think so.

I think in this case the qualities that make commercial speech commercial speech are the fact that it’s fact-based information combined with information solely about business.

Harry A. Blackmun:

Well, certainly Valentine against Christianson has been eroded substantially, hasn’t it?

Thomas F. Heilmann:

That’s right, Your Honor.

And we don’t mean to suggest–

Harry A. Blackmun:

Maybe he was right.

Thomas F. Heilmann:

–Well, we don’t mean to suggest that just because speech is commercial speech that it does not have any constitutional protection.

In the Bolger case, a substantial degree of constitutional protection is afforded to commercial speech.

But the way to handle issues like this is to call it commercial speech.

William J. Brennan, Jr.:

Well, did I understand you earlier to say that what this poses is commercial speech, that’s all, therefore it has no First Amendment effects?

Thomas F. Heilmann:

That’s right.

William J. Brennan, Jr.:

And that’s your position, is it?

Thomas F. Heilmann:

That’s right.

If this isn’t commercial speech and the large body of precedent in the lower courts are wrong, then I think the message that will be delivered by the Greenmoss case is that commercial speech doctrine applies only to commercial advertising and activity like that.

Harry A. Blackmun:

Well what’s wrong with that?

Thomas F. Heilmann:

Well, if that’s so I question whether the Government will lose its power to regulate, by content or otherwise, a whole gamut of “commercial speech”.

In other words, will a consumer credit agency say that the rules under the Consumer Credit Reporting Act are unenforceable because of the free speech clause?

Will licensing of doctors and lawyers raise full freedom of speech?

I suggest that companies like Dun & Bradstreet will come in in those contexts, Your Honor, and say, all we want… and I’m quoting from the Dun & Bradstreet brief here…

“is the limited protection that you gave people in Gertz. “

Sandra Day O’Connor:

Well, in view of the development of the law about commercial speech and the movement toward limiting it to advertising, would it make sense to try to draw a distinction between public speech and private speech instead?

Thomas F. Heilmann:

That may be a possibility, Your Honor.

I think in this case the real issue… I think it is commercial speech.

But the real issue when everything is moved away is, do presumed and punitive damages unreasonably chill this type of speech?

Without necessarily getting involved in–

Byron R. White:

Did you present this argument to the Vermont court?

Thomas F. Heilmann:

–Yes, we did.

We argued that this was commercial speech before the Vermont Supreme Court.

Byron R. White:

Well, I know you argued it was commercial speech.

But did you go on and argue this is commercial speech, it deserves no protection because it’s false?

Thomas F. Heilmann:

That’s right.

That’s what we said.

Byron R. White:

And the way they responded, that isn’t the issue they responded to?

Thomas F. Heilmann:

No, the court didn’t address that issue.

Byron R. White:

They responded to the argument about the applicability of Gertz.

Thomas F. Heilmann:

That’s right, Your Honor.

Byron R. White:

So you’re presenting this as an alternate grounds for affirmance?

Thomas F. Heilmann:

Yes.

Even apart from the commercial speech question in this case, I think the type of speech that’s involved raises a very fundamental reason why the Gertz doctrine is inapplicable.

To me there has always been something hollow about what Dun & Bradstreet is asking the Court to do here, and I think when all the rhetoric is removed what Dun & Bradstreet is asking the Court to do is to apply New York Times and Gertz to protections for concededly false statements of fact, which statements stand totally and exclusively by themselves.

The facts here are not made in support of or associated with any thesis.

They are not made to advance any idea.

This is a different type of situation than the Court had in Gertz.

But in Gertz you said that a false fact without more has absolutely no constitutional protection.

Well, here the entire conceptual structure of these credit reports is only grounded in fact.

Their usefulness is directly and exclusively tied to their accuracy.

Harry A. Blackmun:

Of course, you could say the same thing about the ad in the New York Times case, couldn’t you?

Thomas F. Heilmann:

No, I don’t think you can, Your Honor, because there is a message there.

There is no message here.

The efficacy and the total intrinsic value of this speech depends only on its factual nature.

John Paul Stevens:

Well, but Mr. Heilmann, supposing they had a credit rating and said, we now give this company a credit rating of C instead of B, reason, bankruptcy filed.

John Paul Stevens:

So that you then have a message and then a false fact in support of it.

Thomas F. Heilmann:

Well, I have trouble with–

John Paul Stevens:

Some of these things are–

Thomas F. Heilmann:

–I have a great deal of trouble determining what, if any, that message would be.

There’s really no thesis that a company like Dun & Bradstreet–

John Paul Stevens:

–The message would be his credit isn’t too good any more.

Thomas F. Heilmann:

–But I don’t think that that’s the thesis we’re talking about.

I think there is really no thesis in that type of analysis.

John Paul Stevens:

I know in this particular report it’s kind of a one-fact special report.

But it seems to me very often these reports have a lot of facts in them, and you might have one of them false and a lot of others that are not false, and the conclusion that’s doubtful.

Thomas F. Heilmann:

To follow up what you said earlier, this may be a very rare situation.

This may be the only type of case dealing with just credit reports about facts, that you have to analyze what was said in Gertz and the other cases about facts standing alone.

Byron R. White:

Well, yes, but if you’re right about your commercial speech ground you never get to all this other argument.

Thomas F. Heilmann:

That’s correct, Your Honor.

Byron R. White:

Because I guess you rely on the first requirement for constitutional protection that the Court suggested in Central Hudson.

Thomas F. Heilmann:

We do, and it’s never been–

Byron R. White:

You say that there’s no constitutional objection to the suppression of commercial messages that do not accurately inform the public.

Thomas F. Heilmann:

–That’s right.

Byron R. White:

And if it’s… you say that if it’s conceded this report was false, they have conceded themselves out of First Amendment protection.

Thomas F. Heilmann:

Yes, because–

Byron R. White:

Because this is commercial speech.

Thomas F. Heilmann:

–Not only because it’s commercial speech.

William J. Brennan, Jr.:

Well, if we agree with that isn’t that the end of the case?

Yes.

Thomas F. Heilmann:

I think that is the end of the case.

Thurgood Marshall:

Do you agree with Mr. Garrett that there’s no evidence at all about damages?

Thomas F. Heilmann:

No, I don’t.

My name is Heilmann, Your Honor.

Mr. Garrett argued for Dun & Bradstreet.

I don’t agree that there’s no evidence of damages at all.

Thomas F. Heilmann:

In fact–

Thurgood Marshall:

Well, what evidence?

Would you mind giving me, not too much, but just–

Thomas F. Heilmann:

–I’ll give you just a thumbnail sketch of what happened.

What happened in this case, Your Honor, was that the bank that our client had done business with for many years received the bankruptcy report and, in close proximate time thereafter, not only told our client to take a particular loan request that was on the table elsewhere, but to take the entire banking–

Thurgood Marshall:

–How big was the loan?

Thomas F. Heilmann:

–The loan I think was for $20,000.

We had about $96,000 in other loans with that bank.

And that bank received the Dun & Bradstreet report and shortly thereafter asked our client to go elsewhere.

We went elsewhere.

Thurgood Marshall:

And that was put in evidence?

Thomas F. Heilmann:

That was put in evidence, Your Honor.

Additionally, what I’d like to point out about the compensatory damage award here is that I don’t think presumed damages have any application at all on what I call the compensatory damage award.

Number one, there were no compensatory damages in fact awarded because what the trial court said was that, assuming there’s a high enough level of culpability… that is, using that state common law test for commercial credit reporting agencies, Greenmoss had to prove culpability far higher than negligence to receive any verdict.

If we didn’t defeat the privilege, we would not receive anything.

But if we did defeat the privilege… and we did that in this case… the damages under any presumption were, as the trial court said, one dollar.

The trial court said that substantial damages were not permitted unless Greenmoss proved they in fact occurred; and in the very next sentence said compensation had to be specifically related to damages that were actually caused by D&B.

Further, compensatory damages here were only lost profits and and out of pocket losses.

Now, the court allowed the jury to assess pre-judgment interest at Vermont’s statutory rates on a per annum basis from the date of injury to the date of verdict.

Dun & Bradstreet in its brief says that the most actual damages we showed was $36,000.

When you calculate the interest on $36,000 at the rates the trial court allowed the jury to do, you come up with a figure of $50,022.30.

I think that is exactly what the compensatory damage award did in this case.

Secondly, Dun & Bradstreet points out that $36,000 is only one year of lost profits, ignoring the evidence at transcript 99 and 104 that an additional $42,000 of lost profits was incurred in the next year thereafter.

Curiously, the aspect of–

Byron R. White:

Excuse me.

Do you think that Gertz applies at all in this?

Thomas F. Heilmann:

–No, I don’t.

Byron R. White:

So that you wouldn’t need to prove fault, either?

Thomas F. Heilmann:

No, we wouldn’t have to prove fault.

Byron R. White:

You just go under traditional libel law?

Thomas F. Heilmann:

That’s right.

Byron R. White:

Once you’ve proved falsity and the kind of libel that justifies damages, then the jury is free to presume?

Thomas F. Heilmann:

That’s right.

But I’d like to focus, Your Honor, on the state’s interest in presumed damage, and I’d like to move a little bit differently than this Court did in Gertz.

I would submit that presumed damages, especially in cases like this where you have defamation of a corporation, it really doesn’t involve the plaintiff proving the quantum of damages that makes presumed damages so necessary to the states for preservation of reputation.

Quite to the contrary, I suggest to the Court that it’s making the causal link between demonstrated injury and the defendant’s acts that really involves the states’ interests.

If a plaintiff comes into court, as did Elmer Gertz, and says, I’ve been defamed, but says nothing else about suffering damages… Justice Stevens, your opinion in the Court of Appeals case in the Gertz case points that out; there was no evidence of actual damage in Gertz… I would suggest that a jury will not hand out and a judge will not condone a hefty verdict under a charge like the charge in the Greenmoss case.

It’s the causality link in the presumption that has the important state function.

It’s the tracing and linking between the loss and the wrongful conduct that creates the problem for the defamed person.

William J. Brennan, Jr.:

Mr. Heilmann, were the instructions given given at your request?

Thomas F. Heilmann:

Yes, Your Honor… well, they were Dun & Bradstreet’s instructions almost verbatim.

But we did ask the court to charge under traditional common law libel.

The trial court used virtually all of Dun & Bradstreet’s requests.

Thurgood Marshall:

One other point.

The argument was made here about Dun & Bradstreet had a lot of similar points with a newspaper.

Thomas F. Heilmann:

I don’t think they have a similarity with the newspapers, Your Honor.

Thurgood Marshall:

Was it argued below?

Thomas F. Heilmann:

Yes, it was, in the Vermont Supreme Court.

We never got to the question of whether Gertz should apply at the trial court level.

They just didn’t raise it until after the verdict.

But getting back to where the legitimate state function comes in here–

John Paul Stevens:

May I ask one other question about the instructions, before we lose it.

The instruction on the qualified privilege of a credit reporting agency that was given, was that given at your opponent’s request over your objection?

Thomas F. Heilmann:

–Yes.

The court adopted their request verbatim… no, they didn’t request it verbatim.

The trial court I believe went to the Vermont Supreme Court law library during the lunch recess and got that charge.

It wasn’t really what Dun & Bradstreet had asked for.

John Paul Stevens:

But you objected to that charge?

Thomas F. Heilmann:

Oh, yes.

Lewis F. Powell, Jr.:

Did not Gertz say that included within actual damages could be injury to reputation?

Thomas F. Heilmann:

That’s right.

Lewis F. Powell, Jr.:

Did you ask for an instruction along those lines?

Thomas F. Heilmann:

No, we didn’t, Your Honor, and the reason we didn’t do that is because we’re dealing with defamation of a corporation, and I felt as a trial strategy it was a difficult thing to suggest to a jury that a corporation can be humiliated, and so I didn’t ask for–

Lewis F. Powell, Jr.:

You may lose your reputation with respect to paying your debts.

Thomas F. Heilmann:

–You certainly can.

But I thought with a Vermont jury it was better to say to them that you lose your profits and you lose your out of pocket damages.

Harry A. Blackmun:

You mean they’re that hard-headed in Vermont?

Thomas F. Heilmann:

Well, sometimes they’re cheap, Your Honor.

[Laughter]

But the presumption that allows substantial damages without even an offer of evidence of actual injury, which is what you had in Gertz, is one thing.

But here the legitimate state function of presumed damages is that the intuition of common experience as it has found its way in the common law through centuries of defamation precedent counseled that it’s certain that the harm proved is causally related to the defamation when those two things coexist in time.

And I think that’s really the function that the states have here.

Bear in mind what Dun & Bradstreet is asking this Court to do is to say that the states’ interests don’t matter, and the effect of this case if Dun & Bradstreet is right will be without question to totally constitutionalize the state law of defamation.

Now, I think there is another role or another state interest that states have in defamation, and that is the interest, as the Vermont Supreme Court pointed out, in the difference between an individual who lives in a world that is increasingly dominated by large commercial entities, may well be less able to bear the burden of the consequences of the falsehood than the business that sells the report.

I think that’s another legitimate state interest involved here.

Finally, Vermont, different than Gertz and in fact different than many states, has a specific constitutional provision that protects the reputation of its citizenry.

Our constitution specifically says that the character of our citizens has special protection.

So I think the key to this case here is to say, does a constitutional interest apply?

We say the only way the constitutional interest can apply is if there is a real valid threat of self-censorship.

I don’t think there’s a valid threat of self-censorship.

John Paul Stevens:

May I ask one question.

I think you’re getting to your end.

Take your opponent’s hypothetical of a newspaper of general circulation that has a column on the back: Recent legal developments, subhead bankruptcies, and they mistakenly say your company went into bankruptcy, the same facts.

What happens with that?

Thomas F. Heilmann:

Well, the issue again is self-censorship.

Is the newspaper going to say that they won’t publish this fact… and we’re not talking about your analysis of Greenmoss’ business.

We’re talking about this fact, Greenmoss is bankrupt.

If the newspaper is going to say they won’t publish the fact because of presumed damages, and if they won’t publish that for that reason, for the reason of presumed and punitive damages, then the news will just be pablum, and that’s the fear that the Court has, obviously.

John Paul Stevens:

Let me be sure I understand your answer.

You’re saying a different rule would apply to that case than to this case?

Thomas F. Heilmann:

Yes.

I’m getting into the answer that I think is involved here.

The issue is chilling of speech.

I don’t think a company like Dun & Bradstreet is going to be chilled, because, for one thing, the news media very rarely simply publishes a fact.

They publish the fact in connection with a thesis.

William H. Rehnquist:

But in Justice Stevens’ question I thought he did give you a hypothetical where the newspaper published a fact somewhat separately from its editorial and news coverage.

And I think his question was what should be the rule in that case as to the newspaper.

Thomas F. Heilmann:

Well, I’m not really addressing what should happen in the situation with the newspaper.

I don’t think you can take the result–

William H. Rehnquist:

If you won’t answer it for him, will you answer it for me?

Thomas F. Heilmann:

–Yes, I will, Your Honor.

[Laughter]

I think under Gertz if there was negligence, which in this case there is obviously negligence, the plaintiff would be entitled to the Gertz… the plaintiff would be limited by the Gertz rule.

But I really think we have a different type of defendant here.

Gertz talks about broad rules of application, and you don’t have to look at every particular possible exception.

But I would say one other thing, hopefully to more fully answer your question, Your Honor, and that is in this case if the exact same facts occurred we may have the same result.

If the newspaper did exactly what Dun & Bradstreet did, by sending a 15 year old high school kid with no training up to the federal court in Burlington for $200 a year and never told her what she was supposed to do up there, never edited the information, never followed its own rules that it had on the books for prepublication verification–

John Paul Stevens:

Well, you’re just arguing you’ll win under the actual malice standard, so you can go ahead and retry the case and you’ll still win.

That’s what you’re really saying now, I think.

Thomas F. Heilmann:

–Well, I think I’m just saying in those hypotheticals what Dun & Bradstreet is trying to tell you is that the newspaper would not have the same result, and I disagree with that.

John Paul Stevens:

Well, the question is really should the same standard apply to the two papers, and I think you say no.

Thomas F. Heilmann:

I do say no, Your Honor.

Thurgood Marshall:

You’ve answered it.

Do you think you would give a $75,000 punitive damage against a local newspaper?

Thomas F. Heilmann:

I don’t know what a jury would do, Your Honor.

I think when you’re dealing with the type of instructions that we had in this case, the instructions were very carefully drafted to deal with the question of the defamation and the punitive damage award, and they didn’t focus on the speech.

They focused on the entire gamut of conduct.

It wasn’t really looking at the speaker and saying that speech is bad and we’re going to punish it by way of punitive damages.

It really looked at the entire course of conduct under traditional common law rules.

One thing that I’d like to point out finally is that, let’s suppose, to follow up on your point, Your Honor, that Dun & Bradstreet got the same protection that Robert Welch, Incorporated, got.

Thomas F. Heilmann:

Under this trial what would happen is that constitutional protection for actual damages would apply because of Gertz, and then the constitutional damages for punitive damages under New York Times would apply.

But in addition to that, not only would the plaintiff, but Dun & Bradstreet would look for the common law punitive damage charge just to get to the question of any compensatory damage, and then common law malice to think about and focus upon the other activity that this defendant engaged in.

So you would have four separate things for the jury to handle.

I think that would just hopelessly confuse a jury.

There’s been a lot of commentary about the difficulty between actual malice and common law malice and constitutional malice, and essentially what they’re asking the Court to do is to have a trial where there are those four instructions.

John Paul Stevens:

Of course, the net result if you go back to the Gertz case is you may end up with more money, even after a second trial.

Thomas F. Heilmann:

Well, I understand that that is what happened with Mr. Gertz, Your Honor.

But the problem in Mr. Gertz’ case is he didn’t come in and show any–

John Paul Stevens:

It could happen here, too, because there’s no North Carolina against Pierce problem, I guess, in this area of the law.

Thomas F. Heilmann:

–I think the difficulty that this case presents really shows why Gertz was formulated just to handle media defendants.

This defendant has never claimed until this afternoon that it’s a media defendant.

The case proceeded to the Vermont Supreme Court and the certiorari petition was granted solely based on non-media status.

And I think the difficulties here with Gertz show that the decision was very carefully framed in both rationale, philosophy, and language to deal with a specific type of defendant.

My final point is this.

I mentioned earlier that if this case is extended, if Gertz is extended to this type of a defendant, what we will have is the total constitutionalization of the state laws of libel.

And I think we really have to ask ourselves whether that’s appropriate policy.

Now, we have made accommodations as a society to the reputation of our citizens for the benefit of strong First Amendment protections.

But if Gertz applies here, I’d suggest to the Court it will mean that reputation is so cheap and so unvalued in our society that it can be destroyed by the local gossip monger or by a huge company that pays an untrained high schooler $200 a year to perform a task she was never trained to do.

If private reputation can be so easily damaged, then we have to ask the other question: What benefit is there to a good reputation?

I think the Court will have to question what such a result will do to the positive normative benefits that reputation contributes to our society, and at the same time consider what it will do to the goal that the framers had in mind for the First Amendment if over-the-fence rumor and idle gossip at the water cooler receives constitutional protection.

Every constitutional… every libel case in the country will have the Gertz standard if Dun & Bradstreet is correct in this case.

I think enough speech has been protected under the New York Times formula where you look at the plaintiff and enough speech has been protected when you look at media defendants.

I don’t think there’s a need to extend Gertz any further.

Thank you.

Warren E. Burger:

Thank you, gentlemen.

The case is submitted.

The Honorable Court is now adjourned until Monday next at 10:00.