In this article, the Cato Institute makes the following rather startling claim:
Cato gives no cite for this. My understanding was that the First Amendment doesn’t apply to civil suits, because it enjoins the government from restricting speech. You can’t use the First Amendment to protect against a suit for liable or fraud. Is there any basis to what Cato’s saying here?
It sounds a bit muddy, but the rating agencies are expressing opinions, and opinions are not a basis for libel. Technically it’s not a First Amendment issue, but rather one of libel law. Libel is based upon a false statement of fact (e.g., "this company is lying on its annual reports’) not an opinion (e.g., “We expect the company to be bankrupt by the end of the year”).
So there is a basis, but not due to the First Amendment.
Well there are a few questions the OP asks.
The Supreme Court has effectively ruled, opinion is protected, even if it ruins someone’s livelyhood.
For instance, if I say “Tom Cruise is a jerk and I am not seeing any more of his films, and I think no one else should see those films, 'cause he’s a jerk.”
If every single person then says “You know what, Mark’s right, I won’t see his films anymore.”
Legally Cruise it out of luck, because the statment “I think” and the word “jerk” are clearly intended to show, this is MY opinion.
This is why newspaper run editoral sections, letters to the editor and Op-ed pieces in sections that are CLEARLY marked as such. Newspapers have an obligation to back up their stories with facts. But editorials and letters are opinion and as long as their is no ambiguity it’s fine. That is why those types of colums are place in special areas, so there is no confusing, newspapers run facts, but we make no attempt to pass this off as a fact.
As for lawsuits, yes you can sue them and it’s been done in the past successfully.
In 2002 the a ruling by the San Fran Federal Court District, using the Fair Credit Act allows people who put things on your report(s) to be sued if it’s inaccurate.
The court said the damages will limited to lawyers fees and actual provable damages. Punitive damages can only be assigned if the informaton was willfully put their (as opposed to negligently).
While the court approved the suing of the people the sending of said information, it also approved the ablity to sue the agencies themselves. But the credit reporting agency in this case, after hearing they could be sued, settled out of court for an undisclosed settlement.
Experian was also sued successfully when again, a federal court in SF said, Experian refused to remove information and the safeguards to prevent this were inadequate. The court however seemed to imply that it was simply the lack of controls to remove information in a timely way and in a way with checks that 'caused them to rule that way.
So basically the assertion is that the credit agency is only reporting an “opinion” so to speak. There are laws governing credit agencies and as long as they obey them, they are clear, as long as they follow the rules. If they don’t follow the rules then you can sue them
For instance, if you notice an inaccurate item, you tell them in writing, they have 30 days to get back to you in writing. If you still see it after 30 days, you can inform them they need to remove the faulty item or tell you they aren’t going to.
The credit agency at this point, will most likely refer you to the original complaintant and that’s that. They do not have to tell you why they aren’t going to remove it.
It’s a bit confusing because the terminology is to verify the accuracy of the item on your report. But in reality the credit agency isn’t verifying the ding on your report is true and accurate, the credit agency is verifying that the creditor that put the ding there meant to do it.
Think of a credit agency as a clearinghouse, it’s just a place to store data. And as long as that data is kept in accordance to federal and state laws, they are OK
OP is talking about RATING agencies, which are NOT clearinghouses.
There’s no clear answer here. Pretty sure this is a GD.
But, the issue is muddied because the rating agencies’ “opinions” are required BY LAW to be followed by many state governments, etc. The law says they have to, for example, only buy BBB-rated or better investments. This would be like making it a law that you could only go to movies that received at least 3 out of 5 stars. You can see where “opinion” and “law” collide.
Well, CalPERS is suing the ratings agencies. Definitely something for OP to keep an eye on.