Allegedly false statement bars book publisher from dodging suit

04/18/95

NEW YORK–The Court of Appeals in Albany, the state’s highest court, ruled in late March that a passage in a book about the Wall Street scandals of the late 1980s was not substantially true, and therefore rejected a book publisher’s motion to dismiss a libel suit.

The court also refused to set a “defamation by implication” standard for the state that would require “clear and inescapable” defamatory implication for actionable libel. The court declined to set the standard in its opinion because the case presented not a false suggestion, impression, or implication, but an allegedly false statement of verifiable fact. The mid-level appellate court, the Appellate Division of the Supreme Court in New York City, ruled the book could be read by the average reader to “suggest” misconduct and criminality.

The Court of Appeals stated that the “choice for an appropriate test for claims of defamation by implication must therefore wait another day.”

Michael Armstrong, an attorney who represented Lowell Milken, the brother of junk-bond trader Michael Milken, sued Simon & Schuster, publisher of the book “Den of Thieves” by James B. Stewart, for libel in September 1992 in Supreme Court in New York. The book alleged that Armstrong tried to get one of his clients to sign a false affidavit in order to exonerate Lowell Milken.

The court held that although many statements in the book about Armstrong were true, one “significant statement”–the allegation concerning the false affidavit–was not.

Prior to the publication of the book, Armstrong obtained a copy of the manuscript. Armstrong asked Simon & Schuster to include an errata sheet correcting the alleged inaccuracies, but the publisher refused. (Armstrong v. Simon & Schuster, Inc.; Media Counsel: Roy L. Reardon, New York)

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