New York Appellate rejects Eros' defamation lawsuit
The New York Appellate Division unanimously affirmed a lower court's dismissal of a defamation action against allegations that Eros might be engaging in fraud and misrepresentation
The New York Appellate Division, First Department, affirmed the dismissal of a defamation lawsuit of the Indian firm Eros International against several short-sellers who had questioned Eros' reported financials and accused the media company of engaging in fraud and misrepresentation.
Eros International plc had opted to challenge a lower court decision to dismiss the lawsuit against hedge funds and other investors who had cast doubts through a series of research reports, tweets and presentations about Eros' financials.
Eros International is engaged in the production and distribution of movies and runs an OTT platform Eros Now. The firm is listed with the New York Stock Exchange.
In affirming the lower court's decision, the Appellate on 9 February 2021 agreed that the investors' statements were protected opinion based on each statement's disclosure of underlying facts and the use of speculative language.
The statements in question had questioned the accuracy and integrity of Eros's reported financials and other statements regarding its performance. Eros claimed that the investors had engaged in a "short and distort" market-manipulation scheme and defamed Eros in the process. The defendants, on the other hand, claimed that the lawsuit was an attempt to silence plaintiffs from expressing protected opinions based on legitimate investment research.
The lower court had held that Eros' defamation and conspiracy claims against all of the defendants were constitutionally protected opinion and thus were not actionable. The court had also noted that the reports disclosed the bases for the authors' conclusions in detail encouraged other investors to undertake their analyses of the company's financials.
The court had further observed that the reports, tweets and conference presentations contained "language of conjecture," such as "we believe," "in our opinion" and other disclaimers, which further underscored that the statements were nonactionable opinion.
In reaching its decision, the Court had observed that the challenged reports disclosed the bases for their opinions, disclosed the authors' short positions and contained phrases indicating that the reports were statements of opinion.
The First Department while dismissing the Eros International's petition felt that the mere use of the word "fraud" does not render a statement actionable. It also highlighted that the appellant did not challenge the accuracy of the statements' underlying facts.