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Donald J. Trump v. Timothy L. O'brien

September 7, 2011

DONALD J. TRUMP, PLAINTIFF-APPELLANT,
v.
TIMOTHY L. O'BRIEN, TIME WARNER BOOK GROUP, INC., AND WARNER BOOKS, INC., DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-545-06.

The opinion of the court was delivered by: Payne, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued April 12, 2011 - Decided Before Judges Payne, Koblitz and Hayden.

The opinion of the court was delivered by PAYNE, J.A.D.

Donald Trump, the plaintiff in a suit for defamation, appeals from a Law Division order granting summary judgment to defendants, Timothy O'Brien, the author of TrumpNation, The Art of Being The Donald, and his publishers, Time Warner Book Group, Inc. and Warner Books, Inc.*fn1 On appeal, Trump contends that he produced clear and convincing evidence of actual malice on the part of O'Brien and that issues of fact precluded summary judgment. He argues as well that O'Brien was an agent of his publisher, and thus the publisher defendants should be held liable on a theory of respondeat superior. We affirm.

I.O'Brien is a financial reporter with graduate degrees from Columbia University in journalism, business and United States history. He has reported on business and other subjects for newspapers including The New York Times and The Wall Street Journal, and he presently serves as the editor of the Sunday Business section of The Times. Over the years, O'Brien has written extensively on Trump. In 1992, he served as a research assistant to Wayne Barrett, the author of a Trump biography entitled Trump: The Deals and The Downfall. In 1998, O'Brien wrote Bad Bet: The Inside Story of the Glamour, Glitz, and Danger of America's Gambling Industry, a book that included reporting on Trump's Atlantic City casino operations. In 2004, O'Brien participated in writing a series of articles about Trump that appeared in The Times that focused on financial troubles faced by Trump's enterprises and the difficulty of determining an accurate value for Trump's holdings and his net worth. In one article, co-authored by O'Brien, that appeared on September 8, 2004, he reported Trump's estimates of his own net worth as between $2 billion and $5 billion. However, O'Brien also wrote:

The largest portion of Mr. Trump's fortune, according to three people who had had direct knowledge of his holdings, apparently comes from his lucrative inheritance. These people estimated that Mr. Trump's wealth, presuming that it is not encumbered by heavy debt, may amount to about $200 million to $300 million. That is an enviably large sum of money by most people's standards but far short of the billionaire's club.

In December 2004, O'Brien signed a contract with Warner Books, Inc. to write TrumpNation. Despite negative reporting in the past, Trump cooperated with O'Brien in connection with that book, submitting to interviews on numerous occasions, making available members of his staff including Chief Financial Officer Allen Weisselberg and in-house attorney Michelle Lokey, and disclosing certain financial information and supporting documents. In writing his book, O'Brien reported on information conveyed by Trump, but he also utilized the research he had gathered in connection with his prior writings about Trump, new research, and re-interviews of the three anonymous sources used earlier who, now, "lowered their estimates of Trump's net worth to between $150 million and $250 million (because of the decreased value of Trump's casino holdings at the time [he] was writing the Book)."

On October 23, 2005, The Times published in the newspaper an excerpt from Chapter Six of TrumpNation that contained the lowered estimates provided by the three anonymous sources as to Trump's net worth, but also included a statement that "Donald's casino holdings have recently rebounded in value, perhaps adding as much as $135 million to these estimates." Three days later, on October 26, 2005, the book was published without the added statement.

In Chapter Six, O'Brien discussed at length Trump's vacillating fortunes and the difficulty he experienced in attempting to determine with any accuracy what Trump's net worth actually was. O'Brien commenced the chapter with a description of the first phase of Trump's career - one that ended with admitted debts of $900 million - and the deals he made with banks to restructure those debts. He then turned to a description of Trump's appearance on, disappearance from, and reappearance on Forbes magazine's annual list of America's 400 wealthiest individuals, noting Trump's jockeying for inclusion on that list, and stating that in 2004 Trump ranked 189th with an estimated wealth of $2.6 billion. O'Brien then turned to a conversation that he had with Trump in early 2005, during which Trump had stated that he was worth $5 to $6 billion. However, O'Brien noted that, during the prior August, Trump had stated to him that his net worth was $4 to $5 billion, but later that day stated that his casino holdings represented two percent of his wealth, which "gave him a net worth of about $1.7 billion." Additionally, O'Brien noted that a brochure on the nightstand at Trump's Palm Beach club stated that he was worth $9.5 billion.

Referring to an April 21, 2005 meeting with Weisselberg, O'Brien stated that he had been informed at that time that Trump was worth $6 billion, "[b]ut the list of assets Weisselberg quoted, all of which were valued in very inflated and optimistic terms and some of which Donald didn't own, totaled only about $5 billion." Weisselberg, it was stated, was unable to come up with evidence of the additional billion. A chart detailing "Weisselberg's assessment of Donald's riches" that in large measure corresponds to O'Brien's handwritten notes of the April 21 meeting was reproduced on the facing page.

O'Brien wrote that the chart containing Weisselberg's valuations "left me confused." That statement was followed by the passage that gives rise to this lawsuit. There, O'Brien, relying on his three anonymous sources, stated:

So I asked around for guidance. Three people with direct knowledge of Donald's finances, people who had worked closely with him for years, told me that they thought his net worth was somewhere between $150 million and $250 million. By anyone's standards this still qualified Donald as comfortably wealthy, but none of these people thought he was remotely close to being a billionaire.*fn2

That passage was followed by:Donald dismissed this as naysaying.

"You can go ahead and speak to guys who have four-hundred-pound wives at home who are jealous of me, but the guys who really know me know I'm a great builder," he told me.

Additionally, in Chapter Six, O'Brien discussed Trump's interest in Manhattan property known as the West Side Yards. He noted that Trump had initially purchased the property for $115 million, but had been forced to sell it to a Hong Kong development group in 1994 for $85 million. He wrote: "According to former members of the Trump Organization, Donald didn't retain any ownership of the site - the Hong Kong group merely promised to give him a 20 to 30 percent cut of the profits once the site was completely developed." He stated further:

In June 2005, the Asian investors who controlled the West Side Yards sold the entire site for $1.8 billion - about half the amount that Donald had told me it was worth. Although Donald told me that the site was debt free when the Asians sold it, others involved in the transaction said the Yards carried a substantial amount of debt and expenses that had to be deducted from the sale price. Although Donald declined to detail how much money he realized personally on the sale, it was certainly a fraction of the $1.3 billion he had told me that the Yards would add to his bank account after a sale.

Following publication of TrumpNation, suit was filed on Trump's behalf.

During the course of discovery, Trump sought disclosure of the identity of the three confidential sources utilized by O'Brien, his notes regarding his interviews with those sources, and various other non-confidential materials relating to O'Brien's research, writing and editorial processes. O'Brien resisted disclosure of this information, but following Trump's motion to compel production, the motion judge (a judge different from the one granting summary judgment) ordered that the information and documents be produced. Defendants then sought leave to appeal. We granted the motion and reversed the motion judge's order, finding that the confidential materials were absolutely protected by New York's Shield Law, N.Y. Civ. Rights § 79-h, and the New Jersey newsperson's privilege, N.J.R.E. 508 and N.J.S.A. 2A:84A-21. Trump v. O'Brien, 403 N.J. Super. 281, 298, 302-04 (App. Div. 2008). We found, additionally, that a qualified privilege, which Trump had failed to overcome, applied under § 79-h(c) of New York's Shield Law to non-confidential materials relating to the research, writing and editorial processes that O'Brien sought to protect, id. at 302,*fn3 and that those materials were absolutely protected by New Jersey law. Id. at 302-04.

Prior to moving for summary judgment, O'Brien produced redacted copies of the notes taken of interviews with the three confidential sources in 2004 and 2005. He has declined to identify those sources, claiming that they would be subject to retaliation were he to do so. On March 20, 2009, defendants filed two motions for summary judgment, arguing in one that Trump had failed to demonstrate by clear and convincing evidence actual malice on the part of O'Brien or respondeat superior liability on the part of the publisher defendants, and in the other arguing that Trump had failed to demonstrate that he had been damaged by O'Brien's allegedly defamatory statements. In a lengthy, thoughtful and legally well-supported oral opinion, Judge Michele M. Fox, relying on New Jersey and New York law, which she properly found to be in accord on the issues raised, granted summary judgment on the ground that Trump had failed to establish actual malice. She did not reach defendants' second motion.

II."In order to establish a prima facie case of defamation . . . aplaintiff must show that a defendant communicated to a third person a false statement about the plaintiff that tended to harm the plaintiff's reputation in the eyes of the community or to cause others to avoid plaintiff." McLaughlin v. Rosanio, Bailets & Talamo, Inc., 331 N.J. Super. 303, 312 (App. Div.) (citing Lynch v. N.J. Educ. Ass'n, 161 N.J. 152, 164-65 (1999)), certif. denied, 166 N.J. 606 (2000). Because there is no doubt that Trump is a public figure, to be actionable, the alleged defamatory statements by O'Brien must have been uttered or published with "actual malice." N.Y. Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S. Ct. 710, 726, 11 L. Ed. 2d 686, 706 (1964). To establish actual malice, Trump was required to demonstrate by clear and convincing evidence, id. at 285-86, 84 S. Ct. at 729, 11 L. Ed. 2d at 710, that O'Brien published his statements "with knowledge that [they were] false or with reckless disregard of whether [they were] false or not." Id. at 279-80, 84 S. Ct. at 726, 11 L. Ed. 2d at 706.

We have recently addressed the actual malice standard, stating: In order to meet the actual-malice standard, "a public figure must prove with convincing clarity that the defamatory statements were published by the defendant with knowledge of their falsity or reckless disregard of whether they were true or false." Lawrence v. Bauer Publ'g & Printing Ltd., 89 N.J. 451, 466 (citing New York Times Co. v. Sullivan, supra, 376 U.S. at 279-80, 84 S. Ct. at 725-26, 11 L. Ed. 2d at 706), cert. denied, 459 U.S. 999, 103 S. Ct. 358, 74 L. Ed. 2d 395 (1982). In this context, "reckless disregard" refers to "the publishing of defamatory statements with a 'high degree of awareness of their probable falsity.'" Ibid. (quoting Garrison v. Louisiana, 379 U.S. 64, 74, 85 S. Ct. 209, 215, 13 L. Ed. 2d 125, 133 (1964)). In fact, "the recklessness in publishing material of obviously doubtful veracity must approach the level of publishing a 'knowing, calculated ...


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