New York court adopts standard for defamation by implication

Danielle Keeton-Olsen | Libel | News | May 30, 2014

A New York appellate court unanimously upheld a decision protecting a writer of Barron’s, a financial publication run by Dow Jones & Company, against defamation by implication and adopted a new standard for determining when implied facts can be defamatory.

Plaintiff Maxim A. Stepanov, founder of Midland Consult Ltd. and a former Russian diplomat, asserted that statements in Barron’s article, “Crime and Punishment in Putin’s Russia,” were defamatory by implication, meaning they did not directly state falsehoods but implied them.

Stepanov argued that the article implied his company associated with shell companies, drug cartels and weapons dealers, while falsely implying he was a diplomat under Vladimir Putin when he only served under Mikhail Gorbachev and Boris Yeltsin.

The lower court decided that the plaintiffs did not have a claim for express or implied defamation, and Stepanov appealed, arguing that courts should set a standard that does not require plaintiffs to show a defendant’s intent or endorsement of a defamatory inference.

The appellate court established in its decision that for a plaintiff to claim defamation by implication, the plaintiff must show that the language of the whole piece can be “reasonably read both to impart a defamatory inference and to affirmatively suggest that the author intended or endorsed that inference.”

By applying that standard, the court found Alpert’s statements were substantially true and did not imply or intend to imply negative associations with tax embezzlers, shell companies or drug cartels.