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Donald Trump Sues for Defamation: Is His Net Worth a Fact, or a Matter of Opinion?

Tuesday, Jan. 31, 2006

Last week, Donald Trump filed a defamation suit, seeking a whopping $5 billion in damages ($2.5 billion in compensatory damages, and $2.5 billion in punitive damages).

In choosing these numbers, Trump seems to be following his own advice: 'If you're going to be thinking anything, you might as well think big.' In reality, even a very high defamation verdict would be in the low millions - and such verdicts often are reduced substantially on appeal. Still, the prospect that Trump might garner a few million dollars is enough, by itself, to strike terror into the heart of a defendant.

In this suit, the defendants are journalist Timothy L. O`Brien, author of the 2005 book TrumpNation: The Art of Being the Donald, and Warner Books, which published TrumpNation. O'Brien is a veteran New York Times business reporter, and Warner Books a highly reputable publisher.

Trump said in a statement that "The libel laws of this country exist to protect against the dissemination of malicious falsehoods." He claims that TrumpNation contains just such falsehoods.

In particular, Trump challenges the book's claim that he is not really a billionaire - a claim that makes him out to be both a liar as to this particular fact (for Trump has claimed that he is a billionaire) and, more generally, less competent and truthful in his business than one might otherwise have thought.

According to the suit, Trump is not just a person but also a brand, and his value as a brand "depends on the accurate perception by the financial community and public that Trump is a billionaire."

In this column, I'll explain why it's likely Trump's suit has some merit, but also why the fact/opinion distinction, a key dichotomy within defamation law, might ultimately defeat the suit.

There's Some Reason to Think Trump's Claim Is a Meritorious One

In my columns, I've noted a number of slander or defamation suits that, in my opinion, had little merit, or were otherwise unwise for the plaintiff to bring. Among them were the slander suit against Paris Hilton, the defamation suit against Gene Simmons, and, earlier, the defamation suit by Gary Condit against Dominick Dunne.

I've also picked out one suit that looked to me like a winner for the plaintiff: Britney Spears's and Kevin Federline's defamation suit against US Weekly. Interestingly, Trump's suit looks to me like a winner for the same reason Spears' and Federline's does: There's a good chance both that the article at issue was false, and the publication knew that was probably the case.

Why do I think Trump is on solid ground? There are two basic reasons.

First, Trump previously demonstrated an awareness that to sue for defamation, when an article is true, is the height of folly. Specifically, Trump advised Cameron Diaz in an online comment not to sue the National Enquirer for claiming she fooled around on Justin Timberlake, because Trump, based on his knowledge of Enquirer owner David Pecker, opined that, "when [the Enquirer] prints something, it's right on the button."

I won't make any judgment on whether Trump was right about the Diaz story, or right in his opinion of the Enquirer. (Full disclosure: I once served as an attorney representing the Enquirer.) What this comment means to me, is simply that Trump has displayed awareness of a defamation law basic: Don't sue if a story's true, or if you know the publication has strong facts to back it up.

This point should, of course, be obvious: The very definition of defamation is a false statement of fact, made with the requisite state of mind, causing harm to reputation. (I'll discuss the requisite state of mind later.) Nevertheless, celebrities and their representatives are often aware that filing a defamation suit creates a positive publicity "bounce," regardless of the merits of the suit, whereas dropping the suit (or settling it for nothing) later rarely garners anywhere near as much media attention.

I'm sure Trump, too, appreciates the publicity "bounce" he's gotten. Still, his open advice to Diaz suggests that he wouldn't be suing if he didn't believe that he could prove the falsity of the challenged statements in the book, if push came to shove. (Of course, it could also be that Trump, like many prominent executives, finds it far easier to advise caution in bringing defamation suits when his own personal reputation is not at stake.)

Second, Trump has made statements indicating that he may possess the kind of rare evidence that can prove the requisite state of mind necessary for a defamation verdict in his favor.

In Trump's case, since he is a public figure (at least with respect to business and money matters), the requisite state of mind is "actual malice" - the term famously applied by the Supreme Court in New York Times Co. v. Sullivan. The standard, according to a later Supreme Court case, St. Amant v. Thompson, requires that the defendant "in fact entertained serious doubts as to the truth of his publication."

Proving the Defendant's Subjective State of Mind

The kind of subjective intent required here is notoriously hard to establish : Proving that someone had doubts about a story they've published, is about as difficult as proving that someone had doubts about a marriage they've entered into. In both cases, they'll deny it to their last breath, with suitable indignation.

So how does "actual malice" ever get proven, then? Sometimes, juries look at the evidence in front of a particular editor and say, in effect, "There's no way he could not have known." Arguably, that's improper; it verges dangerously close to saying the editor should have had doubts, when St. Amant's test requires that he in fact had doubts. But since the jury room is a black box, if a jury reasons this way, often no one is the wiser.

And sometimes, the subject of the story has had communication with the editor or reporter, and has provided information rebutting the soon-to-be-published statements. If the subject of the story simply issues a blanket denial, that doesn't mean much - especially if the denial comes through a public relations person, who may feel compelled to heavily shade the truth or pretend ignorance, or who may purposely have remained ignorant on a particular, delicate topic. But if the denial is specific, and supported with evidence, a jury will want to know whether the editor or reporter who received the denial conducted a further investigation into the truth of what he said.

This too is improper, under the law: "Actual malice" is not a negligence standard, so it is simply not enough to say that the publication's investigation of a fact before publishing it, was so scant as to be unreasonable. Once again, under St. Amant, the correct question is not what the editor or reporter should have done, but what he or she actually believed. But once again, given that juries are black boxes, if the jury begins to despise the defendant for not pursuing evidence that was right in front of him - evidence straight from the subject's own mouth (or, more likely, fax machine) - and smacks him with a whopping verdict, no one will know.

Trump claims, with respect to his suit, that he provided O`Brien and Warner Books with a specific denial. That is, he has suggested that he not only told them what they had printed was wrong, but also that he provided them with correct information about his finances, which they chose to ignore. (Indeed, Trump claims that though O'Brien visited Trump's office to check into the matter, O'Brien actually spent his time there trying to convince one of Trump's attorneys to go out with him.)

If Trump did indeed provide information that was ignored, then that's very bad news for the defendants. But conversely, if they did do further investigation and decided, on balance, to go with their original figures, that may be good news for them. Juries do not tend to ask reporters to be perfect, just reasonable.

The Legal Distinction That May Trip Up Trump: Fact Versus Opinion

Does my analysis above mean Trump's case will be a slam-dunk? Hardly.

Assuming that media reports are correct that the core of the suit challenges the claim that Trump is not a billionaire, the defendants may be able to successfully argue that Trump's net worth is a matter of opinion, not fact. And if they do succeed in that argument, then they may win on what is called a motion for summary judgment, in which the case is dismissed before they must face a jury.

Because defamation is, by definition, based on a statement of fact, an opinion cannot be the basis for a defamation claim. And while the amount of money in Trump's wallet right now is a matter of fact, asset valuation issues may mean that Donald Trump's net worth is much closer to a matter of opinion. And values can vary over time: for instance, real estate in New York has generally increased in value in the past few years - sometimes dramatically.

Suppose O'Brien was accurate in describing the character of Trump's assets - that is, he didn't leave anything out -- and suppose he can now (or did then) find an expert to value these assets and liabilities in a way that would lead to a net worth equal to or less than what O'Brien claimed: $150 million to $250 million. In that event, O'Brien may be in the clear. That valuation would arguably push O'Brien's claim into the realm of an opinion, and make him (and Warner Books) liability-free.

Such a valuation would arguably also establish the "not a billionaire" claim as "substantially true" - that is, true in substance, or true enough for the purpose of libel law (I discussed the substantial truth doctrine at greater length in an earlier column.)

This points out an odd feature of the fact/opinion distinction: The very same statement may be a fact (and thus, the basis for a valid defamation suit) in one context, and an opinion in another.

Surely, saying something like "That building is really worth only half what it's valued at; the architect is becoming passé" is a statement of opinion. If so, shouldn't a valuation based on such assessments be deemed opinion too? And isn't the valuation of a brand - which is what Trump says he is, in part - also a highly subjective endeavor where opinion plays a major role?

At the same time, one might deem such valuations as factually false, at the extreme. Some valuations are so low, they'll make any credible expert chuckle. Thus, even when couched as an opinion, such a low valuation - one that no expert would support - is, in effect, a false statement.

As an analogy, consider the case of gamblers: Some losing gamblers are so prolific, it may no longer be a matter of opinion whether they are addicts. Others may be in the muddy middle, where the line between enthusiasm or addiction is drawn by different observers, in different ways.

Finally, some valuations are so very low - "Euros aren't worth the paper they are printed on" -- that they actually become hyperbole. And hyperbole cannot, under the law, count as defamation either: Just as we all have artistic license, we all have a constitutional license to exaggerate when everyone knows that's what we're doing.

The moral of the story: If you're assigning a low value to a tycoon's assets, you need to either get within the rough ballpark, or low-ball the figure so much it's laughable. Otherwise, you may face a suit, and lose.

Julie Hilden, a FindLaw columnist, graduated from Yale Law School in 1992. She practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99. Hilden is also a novelist. In reviewing Hilden's novel, 3, Kirkus Reviews praised Hilden's "rather uncanny abilities," and Counterpunch called it "a must read.... a work of art." Hilden's website,, includes free MP3 and text downloads of the novel's first chapter.

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