Media Law Prof Blog

Editor: Christine A. Corcos
Louisiana State Univ.

Friday, October 28, 2011

New Jersey Court Upholds Grant of Summary Judgment To Author in Trump Defamation Suit

An appellate New Jersey superior court has affirmed a grant of summary judgment to an author and publisher in the matter of Trump v. O'Brien. Donald Trump had argued that Timothy O'Brien's book  TrumpNation: The Art of Being The Donald, and his publishers TimeWarner and Warner Books had defamed Mr. Trump. The lower court ruled that Mr. Trump, as a public figure could not demonstrate actual malice. The plaintiff asserted that he had so demonstrated and in addition, that Mr. O'Brien was an agent of the publishers. The appellate court agreed with the lower court. Below is an excerpt from the ruling.

A major focus of the parties' argument centers on O'Brien's anonymous sources. In that regard, Trump argues that the information supplied was false, that O'Brien deliberately disregarded contrary information, and that O'Brien's reliance on his sources demonstrates actual malice. We disagree.

The Supreme Court has held:

A finding of actual malice may not be based solely on the character of the published statement. ...Nor may it be based solely on the publisher's failure to seek independent verification of the information. ...The two in combination, however, may support a conclusion of recklessness. Public figure libel plaintiffs can recover for
a defamatory falsehood whose substance makes substantial danger to reputation apparent, on a showing of highly unreasonable  conduct constituting an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers. ...
Thus, an inference of actual malice may arise when a false report is published solely in reliance on confidential sources if (1) the content of the report is such as to be defamatory as a matter of law, (2) the defendant knew or should have known of some reasonable means of verifying its accuracy, and (3) the failure to verify rises to the level of a gross violation of the standards of responsible journalism. If the recklessness approaches the level of publishing a knowing, calculated falsehood, the decision whether the defendant acted with reckless disregard for the truth should be submitted to the jury. ....

We do not find that standard to have been met in this case. O'Brien has certified that he re-interviewed his three confidential sources prior to publishing their net worth estimates, and he has produced notes of his meetings with them both in 2004 and in 2005. The notes are significant, in that they provide remarkably similar estimates of Trump's net worth, thereby suggesting the accuracy of the information conveyed. ...

Further, the accounts of the sources contain significant amounts of additional information that O'Brien was able to verify independently. In answers to interrogatories, he listed that information as:

(1) plaintiff's interest in the limited partnerships that owned the West Side Yards project, (2) plaintiff's negotiations with Hilton in the mid-1990s regarding the potential sale of plaintiff's casino company, (3) plaintiff's business dealings with Kenneth Shapiro and Daniel Sullivan; (4) negotiations regarding the restructuring of Trump Hotels and Casino Resorts, Inc. in 2004; (5) the sale of Fred Trump's  [*18] real estate portfolio in Brooklyn in 2004; (6) plaintiff's interest in 40 Wall Street and the level of borrowings relating to that property; (7) plaintiff's interest in the CM Building and litigation surrounding that interest; (8) plaintiff's interest in Trump International Hotel and Tower on Columbus Circle in New York; (9) plaintiff's financial condition and the restructuring of plaintiff's outstanding debt during certain periods.

That the source has provided other reliable information is recognized as an indicator of reliability in criminal cases involving informants. ... It has also been recognized as significant in a defamation context to demonstrate the absence of actual malice. ...

In support of their argument that O'Brien's reliance on his confidential sources was proper, defendants cite Sprewell v. NYP Holdings, Inc., 43 A.D.3d 16, 841 N.Y.S.2d 7 (App. Div. 1st Dept. 2007). In that case, then New York Knicks player, Latrell Sprewell, claimed he was libeled by defendant, Marc Berman, a reporter for The New York Post, when he wrote an article, based in part on information provided by confidential sources, stating that Sprewell had broken his shooting hand in September 2002 by hitting a wall on his boat during an altercation but did not promptly report the injury to the team. Berman noted that Sprewell denied that he broke his hand in the manner Berman claimed. ...

In determining that summary judgment should have been granted by the trial court, even assuming that Berman's statements as to how Sprewell injured his hand were false, the appeals court noted that the information in Berman's articles was not reported as uncontrovertible fact, but rather, the author disclosed that the articles were based on the reports of two confidential informants and that the information was denied by Sprewell. ... The court also noted that the record had demonstrated that Berman subjectively believed the information, and that a partial description of the interior of Sprewell's boat provided additional evidence of reliability. Ibid.

Defendants argue that the facts of the present matter are akin to Sprewell and likewise support summary judgment in their favor. We conclude that defendants' position has merit. In this regard, we note that, contrary to Trump's position, O'Brien does not adopt the low estimates of net worth set forth by his anonymous sources. In his deposition, O'Brien testified: "I had good reason to believe [the sources] felt the numbers were accurate, and I had very, very good reason to believe that they were." However, in the book, O'Brien did not cite the sources' views as fact, but instead utilized their lower figures as an illustration of the spread in estimates of Trump's wealth, while suggesting that, in his own view, Trump's net worth was far less than he claimed it to be. O'Brien's opinions in this regard were not actionable, because they were absolutely privileged. 


Further, as in Sprewell, O'Brien reported Trump's denial of the accuracy of the low net worth figures, although his statement, touting his abilities as a builder, can be construed as less of a denial than an avoidance of the issue presented. Even if that denial had been absolute, which it certainly was not, publication of a statement in the face of denial, however vehement, does not constitute actual malice. 

Additionally, as we have previously stated, O'Brien confirmed much of the information provided by the confidential sources, and, like the reporter in Sprewell, he sought to confirm the net worth numbers. In this regard, we note that in claiming that overwhelming evidence established the scale of Trump's wealth, Trump relied in large measure on a 2004 Statement of Financial Condition prepared by Weiser L.L.P., Certified Public Accountants, to which O'Brien was allegedly given access on three occasions including during the course of the April 21, 2005 meeting.

However, a preface to that Statement demonstrates its limited value as an accurate representation of Trump's net worth. There, the accountants cautioned that they had "not audited or reviewed the accompanying statement of financial condition and, accordingly, do not express an opinion or any other form of assurance on it." Further, the accountants noted significant departures from generally accepted accounting principles, and stated "[t]he effects of the departures from generally accepted accounting principles as described above have not been determined." Among the issues they found to exist was the fact that estimates of amounts to be received in the future did not reflect rights that were non-forfeitable, fixed and determinable and not dependent on future services. The values of Trump's closely held businesses were not expressed in terms of assets net of liabilities, and the ownership percentages of each closely held business held by Trump was not disclosed. Additionally, the tax consequences on Trump's holdings were not set forth. As a result, the accountants concluded:

Because the significance and pervasiveness of the matters discussed above make it difficult to assess their impact on the statement of financial condition, users of this financial statement should recognize that they might reach different conclusions about the financial condition of Donald J. Trump if they had access to a revised statement of financial condition prepared in conformity with generally accepted accounting principles.

Gerald Rosenblum, an accountant who participated in compiling the 2004 Statement of Financial Condition, was asked in his deposition whether he was aware of all liabilities of Trump and his related entities. He responded: "I asked the client to provide me with a list of liabilities as they existed at June 30th, 2005. The client presented me with a list, in essence. I'm not certain to this day that I was aware of all of Mr. Trump's liabilities at that point in time, and I sought no corroboration."

While O'Brien may have had "unprecedented" access to evidence of Trump's financial position, nothing in the record suggests that such access was sufficient to permit an accurate estimate of his net worth. Further, it is indisputable that Trump's estimates of his own worth changed substantially over time and thus failed to provide a reliable measure against which the accuracy of the information offered by the three confidential sources could be gauged. The following exchange from Trump's deposition is illustrative of this point:

Q Now, Mr. Trump, have you always been completely truthful in your public statements about your net worth of properties?

A  I try.

Q Have you ever not been truthful?

A My net worth fluctuates, and it goes up and down with markets and with attitudes and with feelings, even my own feelings, but I try.

Q Let me just understand that a little bit. Let's talk about net worth for a second. You said that the net worth goes up and down based upon your own feelings?

A Yes, even my own feelings, as to where the world is, where the world is going, and that can change rapidly from day to day. Then you have a September 11th, and you don't feel so good about yourself and you don't feel so good about the world and you don't feel so good about New York City. Then you have a year later, and the city is as hot as a pistol. Even months after that it was a different feeling.

So yeah, even my own feelings affect my value to myself.

. . . .

Q When you publicly state what you're worth, what do you base that number on?

. . . .

A I would say it's my general attitude at the time that the question may be asked. And as I say, it varies.

Further, as defendants note in their brief, other sources recognized the difficulty of estimating Trump's net worth and the wide spread of plausible values. Defendants quote a September 9, 2004 article in The Washington Post, which stated:

Actually, it's hard to know exactly what percent of Trump's net worth is tied to the casino business, because most of Trump's portfolio is in privately held companies that don't report earnings. He's described himself as "a billionaire many times over," but who knows? There are skeptics out there who believe Trump has $300 million, tops. And the guy has a reputation for, let's say, shading the news in a light that reflects his enthusiasms.

An April 12, 2004 article, published in Time magazine stated:

How rich is the Donald? To interviewers, he hints that his wealth is somewhere between $2 billion and $6 billion. Rival developers estimate it's nowhere near even the lower figure.

The article continued by reporting on his successful redevelopment of a building at 40 Wall Street, but then balanced it with a report of his casinos "[s]wamped with debt" and the statement that "Trump has become more front man than hands-on developer."

An older Fortune article, published on April 3, 2000, noted that

Trump delights in the sort of elaborate shell games and impenetrably complex deals that frustrate the most conscientious efforts to assess a person's true worth. "It's always good to do things nice and complicated," he once told an interviewer, "so that nobody can figure it out."

That difficulty is compounded by Trump's astonishing ability to prevaricate. . . . [W]hen Trump says he owns 10% of the Plaza Hotel, understand that what he actually means is that he has the right to 10% of the profit if it's ever sold. When he says he's building a "90-story building" next to the U.N., he means a 72-story building that has extra-high ceilings.

And, finally, defendants point to a January 19, 2000 article in The Wall Street Journal that noted Trump's boasts of his success but then stated:

But a look at the major sources of his wealth, including the Trump Place apartment development on New York City's west side, the 70-story Trump World Tower project and the midtown General Motors Building, shows that several of his billions are based on profits that are far in the future — and far from guaranteed.

In summary, we find no evidence to support Trump's conclusion that the confidential sources utilized by O'Brien were fictitious. ...Further we find no evidence to suggest that O'Brien's reliance on the confidential sources suggested actual malice on O'Brien's part under the standards established by Maressa, supra, 89 N.J. at 199-200, 445 A.2d 376, and Sprewell, supra, 841 N.Y.S.2d at 11. We find no basis for Trump's argument that O'Brien had "obvious reasons to doubt the veracity of [his] informants or the accuracy of [their] reports."... There were no significant internal inconsistencies in the information provided by the confidential sources, nor was there "reliable" information that contradicted their reports, so as to provide evidence of actual malice. ... Nothing suggests that O'Brien was subjectively aware of the falsity of his source's figures or that he had actual doubts as to the information's accuracy. ...

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