Opinion ID: 1378965
Heading Depth: 1
Heading Rank: 2

Heading: The Claim of Privilege.

Text: The heart of Retail Credit's defense to this suit is its claim that in providing consumer reports pursuant to its contracts with its subscribers (customers), it is protected by a conditional privilege which may be overcome only by plaintiff's showing that false and defamatory matter was published with malice. Correctly, Retail Credit does not bottom this claim on the First Amendment, as federal decisions have made plain that no First Amendment privilege is available for false and defamatory credit or other consumer reports. As the Fifth Circuit recently ruled in disposing of such a claim of constitutional privilege when urged by Dun & Bradstreet, Inc., We hold that matters of general and public interest do not include libelous and defamatory publications of such a commercial nature as credit reports. Hood v. Dun & Bradstreet, Inc., 486 F2d 25, 29 (5th Cir. 1973). As the Supreme Court recently wrote in an analogous context in Gertz v. Welch, 418 U. S. 323 (1974) (a decision rendered after the date of the verdict in this case), We hold that, so long as they do not impose liability without fault, the states may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual. Id., p. 347. Rather than a First Amendment claim, Retail Credit urges a statutory conditional privilege grounded in Code Ann. § 105-709. That statute recognizes certain privileges including those claimed here, namely, a privilege for statements made in the performance of a legal or moral public or private duty, (Code Ann. § 105-709 (2)), and statements made with the speaker's bona fide intent to protect his own interest (Code Ann. § 105-709 (3)). Retail Credit urges that the information here was provided pursuant to contracts with its customers, and for that reason fell within the scope of these privileges. Though we find this argument circular  Retail Credit claims the privilege exists because it has contracted to do something in the doing of which the privilege would be beneficial to it  it is not necessary to consider these Code sections as if they existed in a vacuum, because they have already been construed in a manner adverse to Retail Credit's contentions here. In Johnson v. Bradstreet Co., 77 Ga. 172, this court in 1886 considered a claim that the Bradstreet Company had libeled a merchant by an adverse mercantile report. The claimed defense was that the company was privileged under the predecessor of Code Ann. § 105-709 (2) because it acted in the performance of a public or private legal or moral duty. The court squarely rejected this defense and ruled that a mercantile report of this nature enjoyed no such privilege which would protect it from liability for false reports. Johnson considered only the predecessor to Code Ann. § 105-709 (2), whereas Retail Credit additionally urges Code Ann. § 105-709 (3) as a source of privilege. However, the company's claim under the latter section is but a restatement of that claimed under the former, and need not be separately considered. Under both arguments, it is its contract with its customers which is claimed as the source of the duty and of the interest of Retail Credit. Moreover, Western Union Telegraph Co. v. Pritchett, 108 Ga. 411 (34 SE 216) is square authority against the latter claim, as it ruled that an exchange of information such as that considered here does not qualify for the privilege accorded one speaking to protect his own interest. Retail Credit vigorously asserts that both Johnson and Pritchett should be overruled. It is entirely true, as Retail Credit argues, that the language of the Johnson opinion is moralistic and outdated, and severely denigrates the important social function of responsible credit reporting agencies which contribute to that free flow of information on which so much modern commerce depends. The reasoning of that 1886 decision need not control us now. However, our rejection of the opinion's language does not mean that its result cannot stand if upon examination we find no compelling reason to change the law of this state there established  that credit reports of the type before us enjoy no conditional privilege. We are convinced that our law should not be changed. Apparently, 48 of the 50 states, excluding only Georgia and Idaho, recognize a conditional privilege in these circumstances. In the face of a conditional privilege, which requires that he prove malice to prevail, a falsely maligned consumer is virtually helpless to protect or avenge his reputation. The conditional privilege recognized almost nationwide would appear to have contributed to the evils which led to passage of the Fair Credit Reporting Act. The pre-Act woes of the consumer are well detailed in Note, The Fair Credit Reporting Act, 56 Minn. L. Rev. 819, 821-824 (1972) which noted that, Aggravating this situation [of inaccurate reports] was the inability of a person injured by a false or misleading report to recover damages in a defamation action. Virtually every jurisdiction recognized the doctrine that reports furnished in good faith to parties having a legitimate interest in the information reported possess a qualified privilege which is not lost simply because the report contains some inaccurate or defamatory matter. The consumer injured by such a report could defeat the privilege only by showing that the report had been furnished out of malice or supplied to persons with no legitimate interest in the information. Since these facts were usually absent, the agencies were effectively insulated from liability for defamation. Id. p. 823 (footnotes omitted). We cannot agree to this weighing of the scales against the individual who stands alone facing a commercial Goliath with the power to destroy  not necessarily through malice but perhaps merely from carelessness  his credit rating, commercial advantages, insurance protection and employment, all through the publication of erroneous reports concerning his affairs. In weighing the policy factors inhering in conditional privilege, Immunity is granted or withheld on the principle of the residuum of social convenience deriving from the protection of one interest at the expense of another. 1 Harper & James, Torts, p. 435, Defamation, § 5.25 (1956). An individual living in a world more and more dominated by large commercial entities is less able to bear the burden of the consequences of a false credit or character report than the agency in the business of selling these reports. Gertz v. Welch, supra, p. 348, has recognized the strength of the legitimate state interest in compensating private individuals for wrongful injury to reputation... We hereby reaffirm the Johnson and Pritchett results and the policy of this state, that such reports do not enjoy a conditional privilege. See also Southeast Bankcard Assn. v. Woodruff, 124 Ga. App. 478, 480 (184 SE2d 191). We endorse the reasoning of the Fifth Circuit in Hood v. Dun & Bradstreet, Inc., supra, in which that court considered whether this court, presented with a proper case, would adhere to Johnson and its progeny or would reject them. The Fifth Circuit, reversing the district court which had come to the opposite conclusion, wrote that sound reasons existed for maintaining the Georgia law as it has traditionally existed: The first reason relates to the underlying principle of the conditional privilege itself. The fundamental reason for allowing credit reporting agencies to claim the conditional privilege was first enunciated in 1914. The reason was predicated upon the idea that if no privilege existed, the reporting agencies would be driven out of business by the cost of defamation suits. Consequently, sources of credit information would be unavailable, credit would be difficult to obtain, and as a result the commercial growth of our nation would suffer. Since 1914 the courts have blindly applied the privilege to credit reporting agencies apparently without examining the fundamental reason for the conditional immunity. We find at least two reasons why a Georgia court would adhere to its earlier Supreme Court decisions. First, this case demonstrates that in one of the states that has refused to grant the privilege, credit reporting agencies exist and are thriving on the credit reporting business. If the basic assumption underlying the rule was correct, presumably there would be no credit reporting agencies in Georgia or Idaho. Additionally, we find that Dun & Bradstreet is not the only credit reporting agency doing a thriving business in Georgia, but there are at least twenty others, one of which is Retail Credit Co., one of the largest such organizations in the United States. Moreover, an empirical study that was prepared comparing credit transactions in Boise, Idaho, where there is no privilege, with a city in its neighboring state, Spokane, Washington, where the privilege exists, also lends support to the assertion that in those states where no conditional privilege is recognized, credit information is readily available and thus does not inhibit commercial credit transactions. Irresistible logic and the absence of empirical verification compel this court to conclude that the privilege should not be blindly applied to credit reporting agencies in this case. A second reason for our decision is that in recent years there has been an apparent shift in emphasis from the protection of the credit reporting agency to the protection of the individual or business enterprise being investigated. The growth in consumer protection in regard to credit reporting is obvious from legislation such as the Fair Credit Reporting Act (FCRA). 15 USCA §§ 1681-1681t (Supp. 1971). Pursuant to the FCRA, the credit agency must disclose to the consumer the substance and sources of information upon its demand, id. § 1681d, the consumer has a right to correct and explain information contained in the report, id. § 1681i, and it may limit access to those who have a `legitimate business need.' Id. § 1681b (3) (E). Furthermore, the Act does not preclude an action at common law except where information that would give rise to a cause of action is obtained by the complainant pursuant to the provisions of the Act. Id. § 1681h (e). We feel, therefore, that based upon information and data such as empirical analysis and contemporary notions of consumer protection, the district court should have adhered to the early decisions of the Georgia Supreme Court and held that there was no conditional privilege afforded defendant under Georgia law. 486 F2d 31-32. (Footnotes omitted). The Georgia rule accords, we think, far better than the conditional privilege recognized elsewhere, with the trend of modern authority to recognize that credit reporting agencies should be held to a fairly high standard of accuracy. Moreover, In several cases... [e.g., Pittsburgh Press Co. v. Pittsburgh Com'n. on Human Relations, 413 U. S. 376 (1973) and Valentine v. Chrestensen, 316 U. S. 52 (1942)] the [Supreme] Court has already drawn a distinction between `commercial speech' and other types of statements, and held that the First Amendment restraints [on libel actions] do not apply to commercial speech. These cases involved governmental regulation of advertisements rather than defamation, and it is uncertain whether the distinction will be held to apply to defamation actions. If it is, then the constitutional restrictions may not be applicable to such suits as a libel action against a credit rating bureau for a false report about the plaintiff's financial condition. ALI Restatement, Second, Torts § 580B Comment (e) (Tentative Draft No. 21, Apr. 5, 1975). Retail Credit additionally urges that it would be insufficient to bottom a decision today on cases as old as Johnson and Pritchett without renewed construction of the language of the determinative Code sections which, Retail Credit argues, can only be read to grant it the privilege. The Code sections, as noted above, require for the privilege either a qualifying duty or interest. Retail Credit claims that is has such a duty because of its contracts with its customers to make reports as requested, and that the consideration it receives for the performance of those contractual duties additionally gives it the interest. Though this argument seems superficially plausible, it does not take much analysis to realize that if this reasoning were accepted, one could create a conditional privilege at will merely by insuring that before speaking of another he receives or is promised a consideration for doing so. Another way of saying this is that one could freely go into the business of contracting to traffic for profit in the reputations of others secure in the conditional privilege which would flow from the fact that the contract one had created gave him a duty to speak, and the consideration he expected to receive therefor gave him an interest. This kind of self-created duty and interest would produce a self-created privilege, and would gut the protection sought to be afforded by our libel statutes. We conclude that the true meaning of these statutory sections is that the duty and interest which are sought to be protected with a conditional privilege must spring from something other than a mere undertaking to speak of others. To take a hornbook example, a father who warns his daughter that the man she loves is a scoundrel is not merely exercising his right of free speech; he is attempting to serve as best he can his pre-existing, independently established relationship of father and protector to his child. As a further example, in Cochran v. Sears, Roebuck & Co., 72 Ga. App. 458 (34 SE2d 296) the company nurse was ruled to have a conditional privilege to report to the company employing her that another employee had syphilis. Retail Credit cites this case and argues in effect that her communication was made for a consideration (her salary); her employment with the company was voluntarily created by her; her report is similar to Retail Credit's reports; and the case is therefore authority for Retail Credit's position here. We cannot agree. The Cochran case shows that the nurse examined the patient in the course of her regular nursing duties, and, finding what she thought was syphilis, reported the finding to the company pursuant to established rules that all illnesses and injuries be so reported so that the company might be aware of the illnesses and injuries affecting its employees on the job. That case does not support Retail Credit's contentions because, to put the matter simplistically, the nurse was primarily in the business of nursing and only incidentally was required to speak of others in the course thereof; Retail Credit is primarily and solely in the business of speaking of others and has apparently no other function to perform. To extend the privilege given the nurse to Retail Credit would, as we have stated above, allow one to create the privilege at will. This result was plainly not intended by the legislature in drafting these Code sections, and duty and interest may not be construed as Retail Credit urges. In conclusion, the publication here in issue was entitled to no privilege under Georgia law, and the trial court's refusal to charge the jury concerning privilege was correct. Retail Credit's enumerations of error numbers 1 through 4 are without merit.