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Ninth Circuit Reinstates Defamation Lawsuit Over Claim that $750K Painting Was Fake

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From Gerald Peters Gallery, Inc. v. Stremmel (nonprecedential), decided Friday by Circuit Judges Richard Paez and Johnnie Rawlinson and District Judge George Wu:

Gerald Peters Gallery, Inc. and Gerald Peters …  (collectively, “Appellants”) appeal from a summary judgment order and judgment entered against them in this defamation/business disparagement action, which they brought against Peter Stremmel …, Stremmel Galleries, Ltd., Mike Overby and Coeur D’Alene Art Auction of Nevada, L.L.C. (collectively, “Appellees”)….

This case involves the sale, by Appellants, of a painting titled “The Rain and the Sun,” represented to be by Frank Tenney Johnson (“Painting”), that was purchased by R. D. Hubbard (“Hubbard”). When a question arose as to the Painting’s authenticity, one of Hubbard’s associates sent images of the Painting to Stremmel, who in a series of emails made comments such as: (1) “Mike Overby and I” “are absolutely certain” “that [the Painting] is not in fact by Frank Tenney Johnson,” and (2) “I hope it wasn’t represented to Dee as an FTJ—and I really hope he didn’t pay a lot for it.” …

In granting the Appellees’ motion for summary judgment, the district court [concluded the e-mails didn’t contain] “a false and defamatory statement concerning the plaintiff” …. The district court erred, however, in determining that it would not have been “reasonable for Mr. Hubbard or his associates to understand Stremmel as intending to refer to [Appellants]” simply on the basis of the fact that Hubbard and his associates had not told Stremmel of the Appellants’ involvement in the sale of the Painting at the time of the initial comments. The alleged defamer’s intent—or lack thereof—in aiming at the particular plaintiff is not controlling (even if it is relevant), so long as the interpretation of the statement as referring to that plaintiff is “reasonable in light of all the circumstances.” In a defamation suit, it matters less “who was aimed at” than “who was hit.” …

[A] defamation claim [is viable] notwithstanding the defendant’s complete lack of knowledge of the identity of the plaintiff…. [And] there is evidence in the record that supports the conclusion that Stremmel knew there was a seller of the Painting at the time of his e-mails, even if he did not know the precise identity when he sent his first two e-mails. Because Nevada law did not require Stremmel to know the precise identity of the seller, whether his e-mails reasonably implicated Appellants was a question of fact for the jury and it was error for the district court to decide this issue as a question of law.

We also: 1) disagree with the district court’s conclusion that a jury could not conclude that certain of Stremmel’s statements implied “an assertion of objective fact under the circumstances”; 2) reject Appellees’ argument that an assertion that a painting is a fake is categorically not a communication that may be defamatory of a seller who has sold—and warranted—it as authentic; and 3) conclude that, whether or not Stremmel’s assertions might be understood as an opinion, a jury could easily find otherwise given the language used in his e-mails. These issues are not appropriate for summary judgment in this case.

On remand, the district court should be guided by the principles that “words do not exist in isolation” and “must be reviewed in their entirety and in context to determine whether they are susceptible of defamatory meaning.” Further, the district court must, in the first instance, determine—with the benefit of a more-complete evidentiary record than we have here—the scope of that “context” given the timing and form of the statements in question….

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Eugene Volokh

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