Last week New York District Court Judge George B. Daniels ruled in favor of author Michael Lewis and his publisher Norton (as well as hedge fund manager Steve Eisman) in a defamation case brought by Wing Chau over passages in a chapter of THE BIG SHORT. As Judge Daniels notes at the end of the ruling–which reads like a blurb for the book–about Chau, who “was one of the largest CDO managers of sub-prime mortgage-backed securities,” that: “Many now view investments in subprime mortgage bonds, and their subsequent disastrous default, as significantly responsible for the greatest economic crisis since the Great Depression. It is understandable that those who were directly involved in such investment activity might fairly or unfairly be targets of public criticism. Chau’s attempt to shift blame for the negative image now publicly ascribed to that activity, and those engaged in it, to the author and his source in the form of a libel suit, is unsupported by law or fact.”
Judge Daniels found that “most of the 26 statements” at issue are “non-actionable expressions of opinion” — or they were “completely or substantially true” — and the book as a whole “represents Lewis’s one-sided view of the people and events related to the collapse of the financial markets.” The judge writes that “epithets such as ‘sucker’, ‘fool’ and ‘frontman’…represent precisely the type of hyperbolic language that lacks precise meaning and is incapable of being proven true or false.”
Importantly for authors and publishers, the opinion reaffirms that the New York state constitution has elected to provide–and is allowed to deploy–“greater protection for statements of opinion” than are found in the US Constitution. As the court has ruled previously as precedent, “under NY law…only assertions of fact are capable of being proven false [and] a libel action cannot be maintained unless it is premised on published assertions of fact.”
Lewis and Norton’s representation was led by Celia Goldwag Barneholtz at Cooley, LLP. (Disclosure: Publishers Lunch is also represented by counsel at Cooley.)