BECKER v. PHILCO CORPORATION., 389 U.S. 979 (1967)
Decided:
December 4, 1967
Syllabus
U.S. Supreme Court
BECKER v. PHILCO CORPORATION. , 389 U.S. 979 (1967)389 U.S. 979
Leo George BECKER et al.,
petitioners,
v.
PHILCO CORPORATION.
No. 145.
Supreme Court of the United States
December 4, 1967
Robert Sheriffs Moss, for petitioners. Laidler B. Mackall and Karl E. Wolf, for respondent.
Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit.
Denied.
Mr. Chief Justice WARREN, dissenting.
This is an important case affecting the rights of millions of workers to vindicate their reputations and to make a living in the military- private industrial complex. See Greene v. McElroy, 360 U.S. 474, 507, n. 31 (1959). According to petitioners, this case presents the following question: 'Is a government contractor endowed with the attributes of a Federal Agency and is it and are its employees clothed with unqualified or absolute privilege to falsely and maliciously defame other employees in reporting a loss, compromise, or suspected compromise of classified information, solely by reason of (1) having contracted with the United States Government to furnish it with supplies or services which are required and necessary to the National Defense, and (2) in connection therewith having entered into a security agreement with the United States Government under the terms of which it has agreed to report the loss, compromise, or suspected compromise of classified information.' Petition for Cert., p. 2. Petitioners brought this action against respondent Philco Corporation, their employer, for an alleged defamation made in a report to the Department of Defense under the terms of a contract for the manufacture of defense items. The complaint alleged that the report contained both false and malicious statements concerning petitioners and resulted in the withdrawal of their security clearances and thus the loss of their jobs. On re-
spondent's motion for summary judgment, the District Court dismissed the complaint, holding the communication absolutely privileged. 234 F. Supp. 10 ( D.C.E.D.Va.1964). Placing unjustified reliance on the authority of the principal opinion in Barr v. Matteo, 360 U.S. 564d 1434 (1959), the Court of Appeals for the Fourth Circuit affirmed. 372 F.2d 771 (C.A. 4th Cir. 1967). In granting an absolute privilege to government employees at the expense of the individual's right to be free from defamation, Barr v. Matteo extended the earlier decisions of this Court to what I and others considered to be the breaking point. That opinion did not command a majority of this Court then, and only one of those who joined it is on this Court today. The conclusion there was reached by balancing
'... on the one hand, the protection
of the individual citizen against pecuniary damage caused by
oppressive or malicious action on the part of officials of the
Federal Government; and on the other, the protection of the public
interest by shielding responsible governmental officers against the
harassment and inevitable hazards of vindictive or ill-founded
damages suits brought on account of action taken in the exercise of
their official responsibilities.' Barr v. Matteo, supra, 360 U.S.
at 565, 79 S. Ct. at 1336.
The deprivation of the employee's rights in the present case is
justified in the following manner: By Executive Order, the
Secretary of Defense is empowered through regulations to safeguard
classified information. [Footnote
1] Pursuant to that power, the Secretary has issued an
Industrial Security Manual which requires contractors to protect
all classified information by maintaining a system of [389 U.S. 979 , 981]
Opinions
v.
PHILCO CORPORATION.
No. 145. Supreme Court of the United States December 4, 1967 Robert Sheriffs Moss, for petitioners. Laidler B. Mackall and Karl E. Wolf, for respondent. Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit. Denied. Mr. Chief Justice WARREN, dissenting. This is an important case affecting the rights of millions of workers to vindicate their reputations and to make a living in the military- private industrial complex. See Greene v. McElroy, 360 U.S. 474, 507, n. 31 (1959). According to petitioners, this case presents the following question: 'Is a government contractor endowed with the attributes of a Federal Agency and is it and are its employees clothed with unqualified or absolute privilege to falsely and maliciously defame other employees in reporting a loss, compromise, or suspected compromise of classified information, solely by reason of (1) having contracted with the United States Government to furnish it with supplies or services which are required and necessary to the National Defense, and (2) in connection therewith having entered into a security agreement with the United States Government under the terms of which it has agreed to report the loss, compromise, or suspected compromise of classified information.' Petition for Cert., p. 2. Petitioners brought this action against respondent Philco Corporation, their employer, for an alleged defamation made in a report to the Department of Defense under the terms of a contract for the manufacture of defense items. The complaint alleged that the report contained both false and malicious statements concerning petitioners and resulted in the withdrawal of their security clearances and thus the loss of their jobs. On re- Page 389 U.S. 979 , 980 spondent's motion for summary judgment, the District Court dismissed the complaint, holding the communication absolutely privileged. 234 F. Supp. 10 ( D.C.E.D.Va.1964). Placing unjustified reliance on the authority of the principal opinion in Barr v. Matteo, 360 U.S. 564d 1434 (1959), the Court of Appeals for the Fourth Circuit affirmed. 372 F.2d 771 (C.A. 4th Cir. 1967). In granting an absolute privilege to government employees at the expense of the individual's right to be free from defamation, Barr v. Matteo extended the earlier decisions of this Court to what I and others considered to be the breaking point. That opinion did not command a majority of this Court then, and only one of those who joined it is on this Court today. The conclusion there was reached by balancing
U.S. Supreme Court
BECKER v. PHILCO CORPORATION. , 389 U.S. 979 (1967) 389 U.S. 979 Leo George BECKER et al., petitioners,v.
PHILCO CORPORATION.
No. 145. Supreme Court of the United States December 4, 1967 Robert Sheriffs Moss, for petitioners. Laidler B. Mackall and Karl E. Wolf, for respondent. Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit. Denied. Mr. Chief Justice WARREN, dissenting. This is an important case affecting the rights of millions of workers to vindicate their reputations and to make a living in the military- private industrial complex. See Greene v. McElroy, 360 U.S. 474, 507, n. 31 (1959). According to petitioners, this case presents the following question: 'Is a government contractor endowed with the attributes of a Federal Agency and is it and are its employees clothed with unqualified or absolute privilege to falsely and maliciously defame other employees in reporting a loss, compromise, or suspected compromise of classified information, solely by reason of (1) having contracted with the United States Government to furnish it with supplies or services which are required and necessary to the National Defense, and (2) in connection therewith having entered into a security agreement with the United States Government under the terms of which it has agreed to report the loss, compromise, or suspected compromise of classified information.' Petition for Cert., p. 2. Petitioners brought this action against respondent Philco Corporation, their employer, for an alleged defamation made in a report to the Department of Defense under the terms of a contract for the manufacture of defense items. The complaint alleged that the report contained both false and malicious statements concerning petitioners and resulted in the withdrawal of their security clearances and thus the loss of their jobs. On re- Page 389 U.S. 979 , 980 spondent's motion for summary judgment, the District Court dismissed the complaint, holding the communication absolutely privileged. 234 F. Supp. 10 ( D.C.E.D.Va.1964). Placing unjustified reliance on the authority of the principal opinion in Barr v. Matteo, 360 U.S. 564d 1434 (1959), the Court of Appeals for the Fourth Circuit affirmed. 372 F.2d 771 (C.A. 4th Cir. 1967). In granting an absolute privilege to government employees at the expense of the individual's right to be free from defamation, Barr v. Matteo extended the earlier decisions of this Court to what I and others considered to be the breaking point. That opinion did not command a majority of this Court then, and only one of those who joined it is on this Court today. The conclusion there was reached by balancing
'... on the one hand, the protection
of the individual citizen against pecuniary damage caused by
oppressive or malicious action on the part of officials of the
Federal Government; and on the other, the protection of the public
interest by shielding responsible governmental officers against the
harassment and inevitable hazards of vindictive or ill-founded
damages suits brought on account of action taken in the exercise of
their official responsibilities.' Barr v. Matteo, supra, 360 U.S.
at 565, 79 S. Ct. at 1336.
The deprivation of the employee's rights in the present case is
justified in the following manner: By Executive Order, the
Secretary of Defense is empowered through regulations to safeguard
classified information. [Footnote
1] Pursuant to that power, the Secretary has issued an
Industrial Security Manual which requires contractors to protect
all classified information by maintaining a system of
Page 389 U.S.
979 , 981
security controls and to report any loss, compromise, or
suspected compromise of that information to the Department of
Defense. [Footnote 2] The
Secretary enters into a Security agreement with his contractors to
implement the provisions of the Manual. The Secretary does not
attempt to clothe the contractor with any immunity from a civil
action for damages caused by defamatory reports.
From this scheme to protect classified information, the court
below took the additional and unwarranted step of conferring an
absolute privilege on the corporation.
'So it was that the company and such
of its employees as were confidants were answerable for keeping the
nation's secrets, as fully as if they were
Page 389 U.S.
979 , 982
governed by the oath of a Federal official. Closely performing
his duties and charged with equal responsibility and layalty, we
think the company and its trusted personnel were imbued with the
official's character, and partake of his immunity to liability,
whenever and wherever he would enjoy the absolute privilege.'
372 F.2d
771, 774.
No authority is quoted for this statement for the obvious reason
that there is none.
I do not cast any doubt on the general powers of the Secretary
of Defense in safeguarding classified information, nor on the
Executive Order, nor on the Industrial Manual, nor on the Security
Agreement entered into in this case. None of these are pertinent to
our decision. Nor is the truth or falsity of the allegation that
Philco maliciously or falsely defamed the petitioners of any
relevance. [Footnote 3] All the
case involves is whether a private corporation under a security
agreement with the Government is entitled to an absolute privilege
to report with 'actual malice' information to the Government that
results in the deprivation of the worker's employment and
reputation.
We have not granted to private citizens a blanket immunity from
legal liability for defaming public officials. Instead, we have
held that a public official may recover for defamatory falsehoods
relating to his official conduct if he can prove the statement was
made with 'actual malice.' New York Times Co. v. Sullivan, 376 U.S. 254, 11 L. Ed.
2d 686 (1964). I can see absolutely no justification for granting
to a corporation contracting with the Government a greater
privilege to defame than we have accorded to private citizens in
commenting upon the
Page 389 U.S.
979 , 983
conduct of public officials. This seems to me to be a complete
inversion of First Amendment rights. A qualified privilege is
clearly sufficient in both situation to protect the paramount
public interest in the free flow of information.
I disagreed with Barr v. Matteo, but even in that case it was
said there were 'other sanctions than civil tort suits available to
deter the executive official' from making defamatory statements in
press releases. 360 U.S.
564, 576, 1342. None of those 'other sanctions' are present in
the instant case. While a defamatory press release might subject
the government official to both public censure and internal
discipline from his superiors, the secrecy surrounding Philco's
communication insulates the defamer from such sanctions. Since the
Department of Defense has no disciplinary power over the employees
of a private corporation for defamatory statements, internal
sanctions are unlikely. It will also be much more difficult for the
Department of Defense to recognize a malicious and false libel
prepared by a private concern doing business with the Government.
It follows then that even assuming, arguendo, that internal reports
made by a governmental employee to his superior should have an
absolute privilege since the superior will be able to evaluate the
accuracy of a statement concerning conditions within his own
department, this does not justify extending the privilege to
communications from private corporations. Thus, the privilege has
been conferred in this case without the normal concomitants of such
protection, leaving the employee's reputation highly vulnerable to
injury by a corporate executive who has no direct responsibility to
the public.
It is difficult for me to understand why the importance of this
case is not apparent to the Court. Personally, I cannot countenance
this indiscriminate extension of
Page 389 U.S.
979 , 984
Barr v. Matteo. I would grant certiorari and invite the
Government to make known its opinion of what the national interest
might be.
Mr. Justice DOUGLAS, dissenting.
I agree with THE CHIEF JUSTICE that this is an important case
which warrants the attention of the Court. It puts into focus
several important issues, among them an aspect of the modern
corporation which has become vital in the Federal Government's
procurement program. Professor Galbraith has referred to it in his
recent book The New Industrial State:
'Increasingly it will be recognized
that the mature corporation, as it develops, becomes part of the
larger administrative complex associated with the state. In time
the line between the two will disappear. Men will look back in
amusement at the pretense that once caused people to refer to
General Dynamics and North American Aviation and A. T. & T. as
private business.
'Though this recognition will not be
universally welcomed, it will be healthy. There is always a
presumption in social matters in favor of reality as opposed to
myth. The autonomy of the technostructure is, to repeat yet again,
a functional necessity of the industrial system. But the goals this
autonomy serves allow some range of choice. If the mature
corporation is recognized to be part of the penumbra of the state,
it will be more strongly in the service of social goals. It cannot
plead its inherently private character or its subordination to the
market as cover for the pursuit of different goals of particular
interest to itself. The public agency has an unquestioned tendency
to pursue goals that reflect its own interest and convenience and
to adapt social objective thereto. But it cannot plead this as a
superior right. There may well be danger in
Page 389 U.S.
979 , 985
this accociation of public and economic power. But it is less if
it is recognized.' Id., at 393-394.
I think the time has come for us to explore this problem; and
the setting of the present case shows how pressing the problem
is.
Footnotes
Footnote 1 Exec. Order No.
10,865, 3 CFR 1959-1963 Comp., p. 398, as amended by Exec. Order
No. 10,909, 3 CFR 1959-1963 Comp., p. 437.
Footnote 2 The Department of
Defense Industrial Manual for Safeguarding Classified Information
provides in part:
'6. Reports
'The contractor shall submit
immediately to the cognizant security officer--
...
'(b) A report, classified if
appropriate, of any loss, compromise or suspected compromise of
classified information.
...
'14. Loss, Compromise or Suspected
Compromise of Classified Information
...
(d) In the event of loss, compromise, or suspected compromise of
classified information outside of a facility the contractor shall
establish procedures requiring that the person discovering the
loss, compromise or suspected compromise shall immediately--
'(1) Notify the local office of the
Federal Bureau of Investigation and furnish sufficient information
to assist in identification of the information (if the loss,
compromise or suspected compromise occurs outside of the United
States, the nearest United States authorities shall be notified in
lieu of the Federal Bureau of Investigation); and
'(2) Report the loss to the
contractor by the fastest means of communication.
'(e) The military department assigned
security cognizance shall conduct such further inquiry as may be
required.'
Footnote 3 However, since
this is a summary judgment, we are required to take the allegations
of the complaint as true.
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