Chau v. Lewis
771 F.3d 118
| 2d Cir. | 2014Background
- Michael Lewis published Chapter 6 of The Big Short describing a 2007 dinner conversation in which Steve Eisman criticized CDO managers; Wing F. Chau (founder of Harding Advisory) was a principal figure in the chapter.
- Chau and his firm Harding Advisory sued Lewis, Eisman, and publisher W.W. Norton for libel based on 26 allegedly defamatory statements in Chapter 6.
- District court granted defendants summary judgment, finding statements were either non-defamatory, opinions, not "of and concerning" Chau, or substantially true; Chau appealed.
- The Second Circuit applied New York defamation law (parties implicitly consented to choice of law) and reviewed summary judgment de novo.
- The court analyzed each challenged statement under New York libel elements: defamatory meaning, factual vs. opinion, "of and concerning" plaintiff, falsity/substantial truth, and special damages/per se rules.
- The Second Circuit affirmed: all 26 statements failed to satisfy one or more elements (non-actionable opinion, not defamatory in meaning, group-based not of/concerning Chau, or substantially true).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statements convey a defamatory meaning | Chau: statements portray him as fraudulently shirking duties, lining his pockets, and admitting to selling out investors — defamatory | Lewis/Eisman/Norton: statements are opinion, rhetorical hyperbole, or not sufficiently derogatory to be defamatory | Court: Many statements are non-defamatory as a matter of law (insults/opinions or not rising to odium) |
| Fact vs. protected opinion (pure vs. mixed opinion) | Chau: attributed quotations and characterizations are factual or imply undisclosed facts and thus actionable | Defendants: phrasing, hyperbole, and signals (e.g., "I had no idea") show opinion; many statements are non-actionable | Court: Statements 1,3,4,5,17,18,19,21,22 treated as protected opinion or non-actionable hyperbole |
| "Of and concerning" plaintiff (group statements vs. individual) | Chau: chapter singles him out and readers would understand statements referred to him | Defendants: many passages target CDO managers as a class, not Chau specifically | Court: Statements about typical CDO managers (e.g., 9–13) are group-based and not "of and concerning" Chau |
| Falsity / substantial truth and harm from fabricated quotes | Chau: several statements are factually false (e.g., assets composition, income, quotations) and quotes were fabricated causing reputational harm | Defendants: certain inaccuracies are immaterial or the gist is substantially true; false attributions not defamatory absent defamatory meaning | Court: Where gist/substance is true, or falsehood would produce no worse effect than truth, statements are non-actionable; fabricated quotes fail because they are not defamatory in context |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice-of-law in diversity cases)
- Celle v. Filipino Reporter Enters., 209 F.3d 163 (2d Cir. 2000) (elements of libel under New York law)
- Sydney v. MacFadden Newspaper Publ’g Corp., 242 N.Y. 208 (defamatory words construed in context of the whole publication)
- Kimmerle v. N.Y. Evening Journal, 262 N.Y. 99 (non-actionable insults that do not expose one to odium)
- Aronson v. Wiersma, 65 N.Y.2d 592 (single meaning analysis for defamatory words)
- James v. Gannett Co., 40 N.Y.2d 415 (ordinary-person standard for defamatory meaning)
- Steinhilber v. Alphonse, 68 N.Y.2d 283 (distinguishing opinion, pure vs. mixed opinion)
- Printers II, Inc. v. Prof’ls Publ’g, Inc., 784 F.2d 141 (substantial-truth doctrine; gist/substance controls)
- Rinaldi v. Holt, Rinehart & Winston, Inc., 42 N.Y.2d 369 (substantial-truth principle in defamation)
- Masson v. New Yorker Magazine, Inc., 501 U.S. 496 (fabricated quotations can be defamatory if they impart a false factual assertion)
- Davis v. Ross, 754 F.2d 80 (2d Cir. 1985) (jury question only if statement is reasonably susceptible to defamatory connotation)
- Fleckenstein v. Friedman, 266 N.Y. 19 (false statements not actionable if truth would have produced no worse effect)
- Mahoney v. Adirondack Publ’g Co., 71 N.Y.2d 31 (false attribution of quotation may be defamatory if it casts doubt on professional fitness)