Stepanov v. Dow Jones & Co.
120 A.D.3d 28
N.Y. App. Div.2014Background
- Plaintiffs: Maxim Stepanov (a Russian businessman) and Midland Consult (Cyprus) sued Barron’s for an April 18, 2011 article alleging a tax-refund/embezzlement scheme and describing related suspicious transactions revealed by Hermitage’s investigation.
- The article described a $230 million tax refund scheme, Credit Suisse transaction records, GT Group (a company-formation agency), and a shell called Bristoll Export; three short paragraphs mentioned Midland/Stepanov as connected to a shell company nested within Bristoll.
- Plaintiffs did not allege any explicit false factual statement; instead they argued omissions and context created defamatory implications (e.g., that Midland/Stepanov were involved in laundering, weapons or drug-cartel-related schemes, or corrupt officials).
- Defendant moved to dismiss, arguing substantial truth, lack of defamatory meaning, and alternate privilege under N.Y. Civil Rights Law § 74; the motion court granted dismissal and plaintiffs appealed.
- The Appellate Division affirmed: statements were substantially true or not reasonably susceptible of a defamatory meaning, and plaintiffs failed to meet the heightened standard for defamation by implication on a motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether express statements were false/defamatory | Stepanov: article omitted timeline and thus implied wrongful conduct | Barron’s: statements substantially true and not defamatory | Held: express statements substantially true and not defamatory |
| Proper standard for defamation by implication on MTD | Stepanov: adopt broader standard that does not require showing publisher intended the inference | Barron’s: require showing language both reasonably imparts inference and affirmatively suggests author intended/endorsed it | Held: adopt the heightened two-part standard (reasonable inference + affirmative suggestion of intent/endorsement) |
| Whether the article implied plaintiffs were involved in illegal schemes | Stepanov: omissions created false innuendo tying Midland to illegal acts | Barron’s: context shows purpose was to identify suspicious factors, not to accuse plaintiffs of crimes | Held: plaintiffs failed to show article affirmatively suggested author intended or endorsed a defamatory inference |
| Whether § 74 fair-report privilege requires decision here | Stepanov: §74 inapplicable | Barron’s: alternatively privileged as fair report of Swiss proceeding | Held: court did not reach or rely on §74 because dismissal was proper on substantive merits |
Key Cases Cited
- Armstrong v. Simon & Schuster, 85 N.Y.2d 373 (Court noted open question on the proper test for defamation by implication)
- November v. Time Inc., 13 N.Y.2d 175 (recognition that implied defamatory intendment can be a jury question)
- Rinaldi v. Holt, Rinehart & Winston, 42 N.Y.2d 369 (minor omissions in otherwise accurate accounts ordinarily not actionable)
- New York Times Co. v. Sullivan, 376 U.S. 254 (First Amendment protections limit defamation recovery and shape standards)
- White v. Fraternal Order of Police, 909 F.2d 512 (articulated test requiring that true facts must be conveyed without affirmative evidence that author intended/endorsed a defamatory inference)