Opinion ID: 482930
Heading Depth: 2
Heading Rank: 1

Heading: proof of defamation

Text: 25 Dun & Bradstreet contends that this case should not have gone to the jury because Sunward failed to prove that anyone considered the credit reports to be defamatory. Sunward counters by arguing that it is entitled to rely solely on inferences drawn from its circumstantial evidence of a decline in sales, and from rumors that it was in financial difficulty. 26 We consider proof of defamation to be an important issue in this case since there is no case of recent vintage where a credit reporting agency has been charged with defamation because it reported a business to be smaller than it really was. We must assume that underestimating the size of a business is not unusual in credit reports, and most of the arguments raised in this case could be raised in other instances. 27 Sunward does not contend that the credit reports in question are defamatory on their face (libel per se). Rather, Sunward's case proceeded on the theory that the reports became defamatory through inferences drawn from extrinsic circumstances (libel per quod). 3 28 Quoting controlling Colorado precedent, the district court aptly characterized Sunward's action as follows: 29 For language to be libelous per se, the facts or reports must be deplorable, derogatory, or disgraceful, and the element of disgraceful imputation must be clearly expressed on the face of the writing. Bernstein v. Dun & Bradstreet, 149 Colo. 150, 368 P.2d 780, 784 (1962). In evaluating a statement or article alleged to be libelous per se, 30 the court must interpret alone, without aid of inducements, colloquialisms, innuendos, and explanatory circumstances. To be libelous per se, the publication must contain defamatory words specifically directed at the person claiming injury, which words must, on their face, and without the aid of intrinsic proof be unmistakably recognized as injurious. (Citations omitted.) 31 Inter-State Detective Bureau v. The Denver Post, 29 Colo.App. 313, 484 P.2d 131, 133 (1971). Words which require an innuendo are not libelous per se. In determining whether words are libelous, they are to be given their ordinary and popular meaning. Knapp v. Post Printing and Publishing Co., 111 Colo. 492, 144 P.2d 981 (1943). 32 I agree with D & B that these inaccuracies and misstatements are not libelous per se. The language in the reports is neutral in content, neither scurrilous nor inflammatory. Only by going beyond the face of the report would the defamation become clear. As such, I find the issue is whether the report is libel per quod. 33 568 F.Supp. at 605-06. 34 The essential extrinsic fact in this case is that in relative terms Sunward was large when Dun & Bradstreet reported it to be very small. The record contains no evidence showing the extent of awareness in the marketplace of the size of Sunward's business, but with sales exceeding $29 million in the 1979 fiscal year its visibility and presence could not have been insignificant. Sunward did establish that in 1975 Dun & Bradstreet had prepared a report on one of the Sunward corporations, as the corporate structure existed at that time. The report correctly reported sales at the seven million dollar level, with forty-five employees. Ex. 26, R. Vol. IV at 99-101. However, because Dun & Bradstreet regularly purges its files it is impossible to know how many subscribers had requested a copy of the 1975 report. Only one recipient was identified. R. Vol. V at 196-97. The fact of relative size difference was augmented by extrinsic evidence concerning the nature, scope and competitiveness of the steel building industry. 35 The additional external facts relied upon by Sunward are that its sales declined dramatically, and that disparaging rumors existed about its financial condition during the time that the inaccurate Dun & Bradstreet reports were being issued. Sunward's sales force also declined, although the precise argument is that a planned phaseout of the sales force due to a conversion from commissioned sales personnel to sales through dealers was accelerated during the time the reports were extant. 36 In its complaint Sunward did not identify those facts or, more importantly, the alleged defamatory inferences with any specificity. 4 4] At trial Sunward distilled its position to a general argument that the Dun & Bradstreet reports, in light of the extrinsic facts, must have been interpreted to mean that Sunward was in financial distress and a state of business failure. In his opening statement, Sunward's counsel stated that rumors started that this company ... was going out of business, it was broke, it lacked substance, it was a paper company. R. Vol. IV at 10. The reports indicated that, for a steel building manufacturer, Sunward was in deep financial trouble and without the resources to stand behind its product. Rumors arose in the field during the time these reports were distributed that plaintiffs were in financial straits. Brief of Appellees at 19-20. 37 There was a second defamatory innuendo, not extensively developed, that a small operator in the metal building industry would not do well because of its size alone. You don't even have to have the two [1975 and 1979 reports] side by side to have concerns that an outfit that purports to be a whizbang manufacturer of steel buildings can't amount to very much if that's all that it has going for it. R. Vol. XI at 653. [T]he reports were defamatory. The reports grossly underestimated plaintiffs' size and financial situation. The evidence revealed the importance in the competitive steel building industry of adequate financial capacity.... Brief of Appellees at 16. 38 As indicated Sunward further implied that it was perceived as unable to stand behind its warranties and engineer's certifications. Sunward was in deep financial trouble and without the resources to stand behind its product. Brief of Appellees at 19-20; R. Vol. XI at 653. 39 Sunward relied entirely upon circumstantial evidence and inferences drawn from that evidence to prove the defamatory imputations just described. It offered no evidence directly linking the Dun & Bradstreet reports to the alleged defamatory meanings. No recipient or other person exposed to one of the reports testified. 5 Mr. Wirth testified that he had no knowledge of any customer or sale which was affected by the reports. R. Vol. IV at 103; R. Vol. V at 181. Sunward explains its position as follows: 40 In this case, D & B distributed reports to, among others, Sunward's competitors. The reports indicated that, for a steel building manufacturer, Sunward was in deep financial trouble and without the resources required to stand behind its product. Rumors arose in the field during the time these reports were distributed that plaintiffs were in financial straits. It is a reasonable inference, given the competitive nature of the industry, that competitors of Sunward, which had received the D & B reports, were responsible for these rumors. Circumstantial evidence supported Sunward's theory. No more was required. 41 Brief of Appellees at 19-20 (emphasis added). 42 The plaintiffs' burden of proof in a defamation case is set out in Sec. 613 of the Restatement (Second) of Torts (1977) 6 as follows: 43 (1) In an action for defamation the plaintiff has the burden of proving, when the issue is properly raised, 44 (a) the defamatory character of the communication, 45 (b) its publication by the defendant, 46 (c) its application to the plaintiff, 47 (d) the recipient's understanding of its defamatory meaning, 48 (e) the recipient's understanding of it as intended to be applied to the plaintiff,(f) special harm resulting to the plaintiff from its publication, 49 (g) the defendant's negligence, reckless disregard or knowledge regarding the truth or falsity and the defamatory character of the communication, and 50 (h) the abuse of a conditional privilege. 51