The motion picture Wolf of Wall Street was based on a book of the same title written by Jordan Belmont.  In the book, Andrew Greene, who was director, general counsel, and head of the corporate finance department at Stratton Oakmont between 1993 and 1996, was discussed extensively.  In the book, Greene is referred to by his nickname “Wigwam” (a reference to his toupee) and described as engaging in criminal conduct.  In the motion picture, Wolf of Wall Street a minor character named Nicky Koskoff, who wears a toupee and went by the nickname “Rugrat” is depicted as engaging in unsavory and illegal behavior.  This includes engaging in adulterous/sexual acts at work and participating in criminal money laundering schemes orchestrated by one of the founders of Stratton Oakmont, Jordan Belmont (played by Leonardo DiCaprio).  Greene sued Paramount Pictures and the film’s producers on the grounds that the Koskoff character presented a defaming portrayal of himself.

It seems that recently there has been a significant number of libel claims that are all based on an unfavorable portrayal of a real person in a work of fiction – television program of motion picture – that is based on real life events.  There is Mossack Fonseca & Co., S.A. et al v. Netflix Inc ., which is based on the streamer’s portrayal of Panamaian lawyers at the center  the “Panama Papers”, leaked documents , that outlined their practice of helping clients move money to avoid tax liability.  The defamation suit claims the program falsely depicts both men as engaging in criminal activity, including subplots that link them to drug cartels and Russian gangsters with Mossack and Fonseca depicted in a “cartoonish” and “palpably farcical” manner that made it obvious the portrayal was fictionalized and intended to be comedic.

There is also the case of Fairstein v. Netflix, Ava Duvernay and Attica Lock in which a former New York City prosecutor is suing Netflix and Ava DuVernay over Fairstein’s portrayal (as a minor character) in the Netflix series, When They See Us.  In her lawsuit, Fairstein claims she is portrayed “in a false and defamatory manner in nearly every scene in the three episodes in which she appears…” and that such portrayal “cannot be justified as the mere use of artistic license or dramatization.”  The complaint claims that the series “depict Ms. Fairstein — using her true name — as a racist, unethical villain who is determined to jail innocent children of color at any cost.”

In California, libel is defined by Civil Code Section 45 as “a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.”  In most states, libel is defined similarly.  In order to establish libel, a plaintiff will have to establish: that the statements were defamatory; that the statements were published to third parties; that the statements were false; and that it was reasonably understood by the third parties that the statements were about the plaintiff.  Where the plaintiff is a public figure – as was the case in the Wolf of Wall Street case, and will likely be the case in the two Netflix cases – the plaintiff must also prove by “clear and convincing evidence” the statement was made with “actual malice” meaning that the defendant knew the statement was false, or had serious doubts about the truth of the statement.

The issue in Greene’s case centered around whether the bad acts attributed to the Koskoff character in the film were about Greene.  This is different from the two Netflix cases where the persons portrayed are real persons.  Here, the Koskoff character was a fictional character.  Greene would have to show that the fictional Koskoff character was “so closely akin [to himself] that a [viewer of the movie] knowing the real person, would have no difficulty linking the two.”

In reviewing the case de novo, the Second Circuit upheld the lower court’s rejection of Greene’s libel case on the grounds that Greene failed to establish that the defendants “acted with knowledge or reckless disregard in making defamatory statements ‘of and concerning’ him.”  Said another way, Greene failed to prove that the Koskoff character was intended to be him.  In coming to the conclusion that the defendants did not act with “actual malice”, the Second Circuit found compelling the following:

  1. The defendants took numerous steps to ensure that no one would be defamed by the film.  The film producers and its writer reduced the number of characters from the number in the book by creating various composite characters who did not correspond to any single human.  The producers also created fictional characters designed to convey the atmosphere of Stratton Oakmont but had no real life analogue.
  2. No reasonable viewer of the film would believe that the producers intended the Koskoff character to be a depiction of Greene.  There is no character named Andrew Greene or Wigwam in the film.  Also, in the film Koskoff held a significantly different job (floor trader) than Greene did in real life (head of Corporate Finance).
  3. The producers included a disclaimer at the end of the film which stated that the characters in the film are fictionalized.

Despite the producer’s win on appeal, this case is an example of the risks inherent in creating a work of fiction, including fictional characters, that is based on real world events.  It also provides examples of steps producers can take to prevent being on the losing side of a defamation claim.