Supreme Court Eases Way for Large Punitive Damage Awards in Some Libel Cases

The Supreme Court on Wednesday eased the way for large monetary damage awards in libel cases, ruling that First Amendment protections against punitive damages apply only when defamatory statements involve “matters of public concern.”

In a 5-4 decision, the court upheld a $350,000 damage award against Dun & Bradstreet, a financial reporting service that had incorrectly reported to five subscribers that a Vermont construction firm had filed for bankruptcy.

The court majority was divided in its reasoning. But five justices agreed that, because the defamatory statement was of private, rather than public, concern, Dun & Bradstreet could not claim the kind of constitutional protection that limits punitive damage awards to false statements made with “actual malice”--knowledge that they are false or with reckless disregard for the truth.

Dun & Bradstreet came into the case as a “non-media” defendant. But the ruling appears to apply to newspapers, magazines and other established print and electronic media as well.

Spokesmen for news organizations and some legal analysts expressed concern that the decision will provide added incentive to bring libel suits with an eye toward generous punitive awards. They noted also that the court had provided little guidance for future cases raising similar issues.

The decision was the latest in a series in which the court has tried to balance the interests of a free press with the right to protect one’s reputation.

‘Uninhibited’ Debate

Historically, libel law had been left to the states. But, in 1964, the court, citing the need to ensure “uninhibited, robust and wide-open” debate on public issues, gave the press new constitutional protection against libel suits by public officials. Only when officials could show “actual malice”--a much more difficult burden than mere negligence--could they win libel suits. Later, that rule was extended to other public figures as well.

In 1974, the court ruled that a private figure--one who does not seek public attention--could collect punitive damages for libel only by proving “actual malice.” Punitive damages--a way of punishing and deterring wrongful conduct--ordinarily involve much larger awards than do compensatory or actual damages.

At issue in this case was a suit brought by Greenmoss Builders after the credit reporting agency erred in telling the construction firm’s creditors that it had filed for bankruptcy. A state trial jury awarded the firm $50,000 in compensatory damages and $300,000 in punitive damages. The firm had contended that it lost $31,000 in profits because of the erroneous report.

‘Non-Media’ Defendants

At first, the case was seen as a question of whether “non-media” defendants--financial reporting services, newsletters and others that provide information for a limited audience--are entitled to the same protection against punitive damages as is the mass media.

But the court, in its ruling Wednesday (Dun & Bradstreet vs. Greenmoss, 83-18), did not try to make such distinctions and based its decision instead on the nature of the defamatory statement.

Justice Lewis F. Powell Jr., in a plurality opinion joined by Justices William H. Rehnquist and Sandra Day O’Connor, concluded that the interests of protecting the reputations of private individuals and businesses outweighed the need to give special constitutional protection to statements of “purely private concern.”

The credit report concerned no public issue but was a matter of interest only to Dun & Bradstreet and its small-business audience, Powell noted. He added that whether such a report ever could be afforded extra protection would depend on its “content, form and context.”

Burger, White Concur

Chief Justice Warren E. Burger and Justice Byron R. White issued concurring opinions, agreeing that the statements in this case involved private--not public--concern.

In dissent, Justice William J. Brennan Jr., joined by Justices Thurgood Marshall, Harry A. Blackmun and John Paul Stevens, said that such material should be entitled to heightened constitutional protection. He chided the majority for providing “almost no guidance” as to what constitutes a matter of public concern.