The Supreme Court narrowed the constitutional protections in some libel suits yesterday, ruling that the First Amendment does not protect against punitive damages unless the libelous statements involve "matters of public concern."
Legal experts agreed that, at a minimum, the decision establishes a new question for judges to resolve in handling libel suits by private figures: whether a statement is a matter of public concern or merely private concern. If it is the latter, the aggrieved parties may obtain substantial damages beyond compensation for the proven harm to their reputation.
The opinion, two years in the making, is another attempt by the court to clarify often confusing developments in libel law. Early reaction from several First Amendment experts indicated they instead might spawn considerable further litigation. Several called the opinion revolutionary and far-reaching.
Justice Lewis F. Powell Jr., writing for himself and two other justices, spelled out the new approach in a case brought against the credit-reporting service, Dun & Bradstreet Inc., for an erroneous item telling several clients that a Vermont builder had filed for bankruptcy.
Dun & Bradstreet argued that even if it were not a member of the news media, it deserves the same protections against punitive damages that the court has granted the press.
Powell disagreed, saying, "There is simply no credible argument that this type of credit reporting requires special protection" from punitive damages. What matters, Powell said, is not who is speaking but what is being said.
"We have long recognized that not all speech is of equal First Amendment importance," Powell said. "It is speech on matters of public concern that is at the heart of the First Amendment's protections . . . . Speech on matters of purely private concern is of less First Amendment concern."
The problem with that distinction, Justice William J. Brennan Jr. wrote in dissent on behalf of himself and three other justices, is that it "provide s almost no guidance as to what constitutes a protected 'matter of public concern.' "
The court first stepped into the libel arena in its landmark 1964 decision in New York Times v. Sullivan. A unanimous court, attempting to assure "breathing space" for free speech, ruled then that a public official may collect damages for a false statement only when he proves "actual malice" -- knowledge that the statements were false or a reckless disregard for whether they were.
That would make it more difficult for public officials to collect damages and would insure "uninhibited, robust and wide-open" debate on public issues, the court said then.
The definition of public officials was later extended to include public figures, such as star athletes or entertainers.
Then in 1974, in Gertz v. Welch, the court said the news media could not be forced to pay punitive damages to purely private figures -- only compensation for provable damages -- except where actual malice was proved.
Most First Amendment experts believed, at least until yesterday, that the 1974 ruling absolutely shielded the press from having to pay punitive damages in those cases. But the decision yesterday apparently reduced that shield, saying that the protection applied only to statements dealing in matters of "public concern."
"In light of the reduced constitutional value of speech involving no matters of public concern," Powell said, "we hold that the state interest adequately supports awards of presumed and punitive damages -- even absent a showing of 'actual malice.' "
Powell was joined by Justices William H. Rehnquist and Sandra Day O'Connor in Dun & Bradstreet Inc. v. Greenmoss Builders.
Chief Justice Warren E. Burger and Justice Byron R. White concurred in the ruling but would go further and overrule the 1974 decision.
The case began in 1976, when the credit company incorrectly notified five of its subscribing companies -- including Greenmoss' bank -- that Greenmoss had filed for bankruptcy. In fact, a Greenmoss employe, not the company, had made the filing.
The error was made by a 17-year-old part-time employe of Dun & Bradstreet. The company issued a correction but refused to tell Greenmoss which companies received the original notice.
A jury awarded Greenmoss $50,000 in compensatory damages and $300,000 in punitive damages, although Greenmoss showed actual losses of about $30,000. The reporting company claimed that no "malice" had been shown and that it should not be forced to pay the punitive damages.
The Vermont Supreme Court disagreed, and, for different reasons, so did the majority yesterday.
Bruce Sanford, a Washington attorney and media lawyer, said that "it is fair to say that the opinion puts the courts back into the uncomfortable briar patch of deciding what speech has value or importance or is a matter of public concern.
"We all had assumed that Gertz the 1974 case took courts out of the business of being super-editors and deciding what was of public interest," Sanford said.
Most court observers assumed that the justices would decide the more limited question of whether non-media defendants should get enhanced protections.
They did not anticipate the possibility of lowered protections on a broader basis.
"Powell envisions that judges will take a broad view on what is public concern," Sanford said, " but what some people believe is gossip is going to be viewed differently by different courts. A tidbit about a football player or celebrity may be gossip to some and news to others. If it is gossip, it is not protected."
New York attorney Floyd Abrams saw a "deeply troubling ruling which places the courts in the role of determining which speech is of public concern and importance and relegates all other speech to the nether land of virtually no constitutional protection at all."
"What is most startling is the retreat from the prior cases of the court in which they shied away from making content distinctions between speech more or less worthy of protection," he said.
"What will develop is a new body of law over what is public concern," he said, "but only after more uncertainty and far more litigation."
The more complex and costly First Amendment libel law becomes, Abrams said, "the more appealing it becomes to reconsider limiting damages" instead of erecting other barriers to suits.