Greene claims he was portrayed in the movie as a character with the nickname Rugrat, who is an immoral attorney and drug user who wears a bad toupee. His claims include allegations of defamation and violation of New York Civil rights Law Sections 50 and 51, which prohibit the unauthorized use of a person’s image. Greene was the head of corporate finance for the firm depicted in the film, Stratton Oakmont, and was referred to in Belfort’s memoir by his real name and the nickname Wigwam. While the producers did not disclose Greene’s actual name in the movie, Greene contends that from the circumstances, he was identifiable to the public as the character wearing an ill-fitting toupee. Stratton Oakmont was a brokerage firm notorious for manipulating the market by buying up a particular company's stock, pumping up its value, and then reselling it to unsuspecting investors who would suffer huge losses.
This is hardly the first time that a plaintiff who is not identified by name in a film has sued when they have been portrayed without their permission. The seminal case arose in England in 1934 with Youssoupoff v. MGM, where MGM produced a movie “Rasputin and the Empress” based on a novel, in which a character named Princess Natasha, who resembled Russian Princess Irina Youssoupoff, was ravaged or seduced by Rasputin, a man with the worst possible character. In the movie, Rasputin is murdered by several men, including the prince whom the princess intended to marry. Princess Youssoupoff brought suit for libel, claiming that the public had come to identify her as a woman of questionable repute as a result of the movie.
Prior to the release of this movie, Princess Youssoupoff’s husband had published a book discussing his participation in the murder of Rasputin. As a result, the prince character in the film, Prince Chedgodieff, was likely to be perceived by viewers to be Prince Youssoupoff and lead viewers to conclude that the character Natasha was Princess Youssoupoff. MGM described the film as factual, although it was a fictionalized account, and the studio said that some of the principal characters were alive. The jury concluded that reasonable people would perceive the character Natasha to be Princess Youssoupoff and awarded her substantial damages.
This case is often cited for the principle that you can defame a person even if you do not reveal their name, if the context and circumstances enable the listener or viewer to identify the person. As a result of this case, studios routinely add disclaimers saying all characters and incidents are fictitious. I have even seen such disclaimers despite the notification, in the opening credits, that the movie is based on a true story. In this case, Paramount provided the following disclaimer:
While this story is based on actual events, certain characters, characterizations, incidents, locations and dialogue were fictionalized or invented for purposes of dramatization. With respect to such fictionalization or invention, any similarity to the name or to the actual character or history of any person, living or dead, or any product or entity or actual incident, is entirely for dramatic purpose and not intended to reflect on an actual character, history, product or entity.
Paramount is saying that while the story is based on true incidents, a lot of characters and other stuff are made up. Of course, it will not be apparent to most moviegoers which aspects of the story are true and which are invented. However, the disclaimer is far better for Paramount than the one used by MGM, which claimed the story was true when some of it was not.
Although, not naming Greene does not provide a complete defense for Paramount, Greene will nevertheless find it difficult to prevail. He will have a tough time establishing a connection between himself and the Rugrat character. Paramount has moved to dismiss the claim on the basis that there were two executives affiliated with the firm that had bad hairpieces and readers of the book would understand that Rugrat was a composite character. And, for those who have not read the book, they have no reason to believe that Greene was Rugrat.
In cases like this, courts have often declined to find liability because the defamatory matter was not clearly of and concerning the plaintiff. For example, in the case of Clark v Random House, Inc, library worker Daria Carter-Clark filed suit against Joe Klein, author of the best-selling novel “Primary Colors” and his publisher for injuring her reputation. The book was based on the 1991 presidential primary campaign of Bill Clinton, although in the book the candidate is named Governor Stanton. Carter-Clark’s claims arose from a scene in the novel, in which the fictional Governor Stanton emerges from a hotel room unkempt and tucking in his shirt, with a character named Ms. Baum. Carter- Clark alleged that people who read the novel falsely assumed that she was Ms. Baum and that she had romantic relations with Clinton. In real life, Clinton had made an appearance at the library where she had worked, but there was no intimate contact between them.
The Court noted that “any purported similarities” between Carter-Clark and Ms. Baum’s character, such as that they both worked at the library, were “superficial” and thus the scene that Carter-Clark objected to in the novel was not really “of and concerning” her. In response to Carter-Clark’s claim that the publisher was negligent in not investigating the facts, the court noted that because the book was fiction, the publisher was not obligated to undertake such an investigation.
Greene has also alleged the unauthorized use of his image and likeness in the movie. However, his real name and actual image are not in the movie--just the image of an actor portraying a character he claims represents him. New York's right of privacy is based purely on a statute, specifically, Sections 50 and 51 of the New York Civil Rights Law. Courts have held that there are no common law rights to protect one’s image from commercial misappropriation in New York. In 1902, after a women’s likeness was used in a flour advertisement without her consent, the Court of Appeals in Roberson v. Rochester Folding Box Co., rejected a right of privacy claim and held that there was no right of privacy in New York. The New York Legislature responded by enacting Sections 50 and 51 of the New York Civil Rights Law, creating a “limited statutory right of privacy.”
The statute prohibits the use of a person’s name, picture, or likeness for advertising or trade purposes. It does not apply where the use occurs in the context of a report of newsworthy events or matters of public interest, since such a use is not considered for the purposes of advertising or trade, and such a prohibition would violate the First Amendment’s right of free speech. Perhaps the biggest barrier that Greene will need to surmount is proving his reputation has been harmed. In the book, his real name is used and he is portrayed as someone who smoked thousands of marijuana joints, delivered Quaalude tablets to Belfort, and was caught cheating on his SAT’s. He is characterized as a shyster lawyer and an amateur in the securities business. Moreover, Paramount mentions in its motion to dismiss that Greene was unsuccessful in challenging an arbitration award against him, holding him liable for $2.18 million stemming from securities fraud.
Defamation is a communication that harms the reputation of another so as to lower him in the opinion of the community or to deter third persons from associating or dealing with him. For example, those communications that expose another to hatred, ridicule, or contempt, or reflect unfavorably upon one’s personal morality or integrity are defamatory. However, if remarks hurt someone’s reputation, but they are true, they are absolutely privileged. An absolute privilege cannot be lost through bad faith or abuse. Truth is an absolute privilege because society values truth more than it values the protection of peoples’ reputations. And, even if truth is not an absolute defense to all the allegations in the movie, Greene is going to have to prove that his reputation was damaged. This can be very difficult if one’s reputation is already in the gutter.
In real life Stratton Oakmont agreed to pay a $2.5 million fine to the SEC in 1994 in order to settle a civil securities fraud case, with Belfort and two other partners paying $100,000 each. Belfort was arrested in 1998 for securities fraud and money laundering. After cooperating with the FBI and providing the FBI with information on his friends, he was convicted and he received a 4-year sentence. He was ordered to repay $110 million to a victim compensation fund, but according to one news report, he has paid less than $12 million in restitution, and has reneged on his agreement to fork over 50%of his income toward the fund. Greene was not convicted of any crimes from his activities at Stratton Oakmont, but appears to have enough of a checkered past that he may find it difficult to convince a jury that his reputation has been hurt by the movie.
About Mark Litwak: Mark Litwak is a veteran entertainment attorney and producer’s rep based in Beverly Hills, California. He is the author of six books including: Dealmaking in the Film and Television Industry, Contracts for the Film and Television Industry, and Risky Business: Financing and Distributing Independent Film. He is an adjunct professor at USC Gould School of Law, and the creator of the Entertainment Law Resources with lots of free information for filmmakers (www.marklitwak.com). He can be reached at email@example.com.
Mark will be conducting a one day seminar in New York City on April 25th, 2014 called Risky Business: Financing and Distributing Independent Films. To enroll click here: Volunteer Lawyers for the Arts.
 Eng. Ct of App., 50 Times L.R. S81, 99 A.L.R. 864 (1934).