## Facts

- Wing F. Chau founded and owned Harding Advisory LLC, a manager of collateralized debt obligations (CDOs).
- Michael Lewis authored a nonfiction book about investors who bet against the subprime mortgage market; W.W. Norton & Company published it.
- Chapter 6 of the book, largely narrated from hedge fund manager Steven Eisman’s viewpoint, described a January 2007 dinner conversation involving Chau.
- The chapter used sharp characterizations of Chau (e.g., calling him a “fool” and “pilot of the ship of doom”) and suggested he prioritized deal volume over quality and shifted risk to investors.
- Chau and Harding Advisory sued Lewis, Eisman, and the publisher for libel under New York law based on 26 identified statements in the chapter.
- The district court granted defendants summary judgment and dismissed all claims; plaintiffs appealed.

## Issues

1. Whether any of the 26 challenged statements constituted actionable libel under New York law (defamatory factual statement about plaintiffs, published with fault, falsity, and legally cognizable harm).
2. Whether the challenged passages were nonactionable opinion, rhetorical hyperbole, or narrative characterization when read in context.

## Decision

- The Second Circuit affirmed summary judgment for all defendants.
- The court held that none of the 26 challenged statements were actionable libel under New York law.
- The court concluded many statements were opinion or rhetorical characterization rather than verifiable assertions of fact.
- The court further concluded that several challenged statements either did not meet New York’s threshold for defamatory derogation, were not “about” the plaintiffs, or were too generalized or insufficiently shown to be false.
- Judge Winter dissented, arguing some statements portrayed Chau’s state of mind as fact and could be found defamatory by a jury.

## Legal Principles

- Under New York law, a libel plaintiff generally must prove: (1) a written defamatory statement of fact about the plaintiff, (2) publication, (3) fault, (4) falsity, and (5) special damages or per se actionability.
- Not all harsh or insulting remarks are defamatory; actionable defamation requires a level of derogation that exposes a person to public hatred, contempt, or significant ridicule.
- Statements that are opinion, evaluative judgment, or rhetorical hyperbole—especially when signaled by context—are not actionable because they are not objectively verifiable as true or false.
- Context controls the fact/opinion inquiry; narrative voice, viewpoint attribution, and stylistic cues may indicate readers are receiving characterizations rather than factual reportage.
- Courts may resolve defamation claims at summary judgment when, even on the plaintiff’s view of disputed facts, the challenged statements are nonactionable as a matter of law.

## Conclusion

The Second Circuit affirmed dismissal of Chau and Harding Advisory’s libel suit because the challenged passages, read in context, were largely opinionated narrative characterizations or otherwise failed New York’s requirements for actionable defamatory factual statements about the plaintiffs.


Chau v. Lewis, 771 F.3d 118 (2d Cir. 2014)