$200K Libel Award for Cybersecurity Expert Accused by Substacker of Being "Israeli Spy"
· Reason
A short excerpt from the long opinion Friday by Judge Michael S. Nachmanoff (E.D. Va.) in Apelbaum v. Bloom:
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Plaintiffs Yaacov Apelbaum and XRVision Ltd., a cybersecurity and facial recognition technology expert and his company, filed suit against Defendant Jordan Arthur Bloom, a blogger and journalist, on January 28, 2025. In the original complaint, Plaintiffs alleged that Defendant had made certain defamatory statements about them in a January 29, 2024, Substack blog post (the "First Article") regarding Plaintiff Apelbaum being an "Israeli spy." The First Article was purportedly republished in a November 23, 2024, Substack post (the "Second Article") by Defendant responding to Plaintiffs' cease and desist letter….. {The statements [presented to the jury] were: (1) "Yaacov Apelbaum is an Israeli spy, and the sort of Israeli spy who would have good reasons to smear American facial recognition technology, because his company, XRVision, is a competitor;" (2) "So this is an Israeli spy who's deeply involved in shaping the Hunter Biden story[]" ….}
The jury returned a unanimous verdict against Defendant after about one and a half hours. As indicated on the special verdict form the jury found that Defendant had made the First Article statements with actual malice and awarded $75,000 compensatory damages and $125,000 punitive damages, as to each Defendant [error for "each Plaintiff," the verdict form shows -EV] on each statement.
Defendant moved to vacate the judgment, but the court said no:
[1. Defamatory meaning:] [T]he First Article statements ultimately presented to the jury were actionable as defamation per se because "allegations of close ties to a foreign intelligence agency could prejudice a cybersecurity professional and his firm." …
[2. Falsity:] [T]he evidence presented at trial was sufficient to permit a jury to conclude that the 2024 First Article statements that Plaintiff Apelbaum "is an Israeli spy" were, in fact, false. Plaintiff Apelbaum testified that he was conscripted into the Israeli Defense Forces ("IDF") for seven years, served in a combat reconnaissance company in the paratrooper brigade collecting field information on troops, performed a mixture of operational and intelligence related assignments, was not an intelligence officer, finished his service in 1987, and has not had contacts with the Israeli government since that time….
[3. Private figure status:] Plaintiff Apelbaum was properly determined to be a private figure …. [Defendant] failed to show with competent evidence that Apelbaum was a limited purpose public figure as Defendant had not established that the Hunter Biden laptop controversy or any controversy regarding Apelbaum's status as an Israeli spy were matters of public controversy. {[From an earlier opinion:] Plaintiffs Apelbaum and XRVision … attracted media attention in 2020 for their role in examining Hunter Biden's laptop computer, purportedly "analyz[ing] the contents" of a copy of the hard drive "to determine the legitimacy of the [l]aptop."} … The Court notes further that Defendant has provided essentially nothing that would shed light into what exactly Apelbaum was doing in the Hunter Biden laptop affair…. Additionally, by the time the allegedly defamatory First Article statements were made on January 29, 2024, it is doubtful that Apelbaum retained any public figure status regarding the Hunter Biden laptop affair given that the matter arose in October 2020 and the world had long moved on from the beginnings of the issue.
[4. Private concern of speech:] Virginia's Anti-SLAPP law provides immunity from civil defamation claims "based solely on statements (i) regarding matters of public concern that would be protected under the First Amendment to the Constitution of the United States" unless made with actual malice. Speech involves a matter of public concern when it involves an issue of social, political, or other interest to a community. But the public concern is not implicated by speech regarding a "purely personal" topic…. "[P]ersonal grievances … or expressions about other matters of personal interest do not constitute speech about matters of public concern" ….
Plaintiff claims that "covering the intrigues regarding Hunter Biden is within the scope of what journalism in the public interest is for." But this description belies what the First Article was actually about. The First Article tangentially mentions the Hunter Biden laptop issue but meanders between topics such as "Dianna Pagano, one of the women who procured hookers for [Hunter Biden]," federal police reform efforts, Pagano's arrest by a Connecticut police officer indicating "Hunter Biden is getting his hookers from the locality most under the gun of the Obama DOJ," XRVision's technological capabilities ("it doesn't appear to be as good as Clearview, for instance"), Apelbaum's connections to conservative figures and publications, Apelbaum's own writings, and Apelbaum forming a Florida auto parts company that was dissolved on the same day that the Surfside condo complex was demolished (by the company that demolished the Murrah building after the Oklahoma City bombing) using an attorney who also represented Mac Isaac. Viewed in their entirety, the First Article and its defamatory statements have little to do with the public's interest in Hunter Biden or any issue of public concern but rather reflect Plaintiff's original and "purely personal" interests….
[5. Knowing/reckless falsehood ("actual malice"):] At trial, Defendant was examined by Plaintiffs and testified under oath that when he made the statements in question, he did not know what involvement Apelbaum had in the IDF and did not contact Apelbaum despite having done so in the past regarding unrelated matters. Defendant stated that he did not have a fact-checker for his Substack blog (on which the statements appeared), was not a member of any professional journalism organization and did not follow a journalistic code of ethics, and did not contact any governmental authorities to determine if Plaintiff was a spy. Further, Defendant agreed that he was a journalist and that a journalist had an obligation to verify information before publication and should seek comment from the subject of a contentious matter before publication.
Defendant also acknowledged that the First Article cited (but apparently disbelieved) an article published in the Arizona Republic that expressly stated that "[t]here's no evidence to suggest Apelbuam, 60, is a spy[.]" He noted that the article also stated that some of "Apelbaum's close business associates have ties to foreign intelligence and military agencies, including the Israeli Defense Forces." These portions of the Arizona Republic Article were reprinted in the First Article.
Plaintiffs introduced into evidence a March 2023 article posted by Defendant on his Substack regarding Israeli influence in conservative political movements stating that "Benjamin Netanyahu is at the head of an industrial-scale hacking and blackmail operations the likes of which the world has never seen … [t]he spying has sociological implications: it changes the assumptions you have to make. You have to go from a presumption of trust to a presumption of distrust, and that's obviously bad for American Jews …. Get into bed with these people and sooner or later they'll have you trying to start a different war[.]"
Additionally, Plaintiffs presented a November 2023 tweet by Defendant stating "The lede: 'A cybersecurity operative with ties to foreign intelligence agencies.' …. Which ones, pray tell, might a guy named Yaacov Apelbaum, whose company operates in Israel, Singapore, and the U.S., and collaborates with American Bibi ally Jim Hoft, might he have ties to?" Defendant testified that that the "cybersecurity operative" referred to was Apelbaum and that the Arizona Republic mentioned that his business associates have ties to foreign intelligence agencies like the IDF.
For his part, Defendant introduced no exhibit evidence and told the jury that his statements were based on him receiving a different version of the Hunter Biden laptop hard drive than Apelbaum and public reporting of "Yahoo News Singapore," "Biometric Update," "Crunchbase," and venture capital tracking platforms. He asserted that his statements were reasonable.
All of the foregoing parts of Plaintiffs' case provide more than an adequate basis for the jury to have determined by clear and convincing evidence that Defendant made the First Article statements with actual malice. A defendant acts with "actual malice" when they make a defamatory statement "'with knowledge that it was false or with reckless disregard of whether it was false or not.'" This is a subjective inquiry into the defendant's state of mind that is susceptible to proof through circumstantial evidence. "Reckless disregard" means that the defendant "entertained serious doubts as to the truth of his publication."
Failure to investigate is relevant evidence but "does not in itself establish bad faith." So too is a departure from journalistic standards.
But "failure to investigate before reporting a third party's allegations can be reckless 'where there are obvious reasons to doubt the veracity of the informant or the accuracy of his reports[,]'" as such is indicative of purposeful avoidance of the truth. Additionally, "evidence that a defendant conceived a story line in advance of an investigation and then consciously set out to make the evidence conform to the preconceived story is evidence of actual malice, and may often prove to be quite powerful evidence."
This is a case in which "proof of all three" of "failure to adequately investigate, a departure from journalistic standards, [and] ill will or intent to injure," or at least a preconceived belief, provided sufficient evidence for the jury's finding of actual malice. Eramo v. Rolling Stone (W.D. Va. 2016). The jury could reasonably have determined that Defendant acted with reckless disregard in deeming Apelbaum an Israeli spy because it served his preconceived notion that Israeli spies were co-opting domestic affairs. {Indeed, the First Article alluded to "problems in the U.S.-Israel relationship [being] a clear threat to the American defense-industrial base," Plaintiffs' connections with conservative political figures and outlets, and stated that "[w]hat the case of Apelbaum actually represents is how badly the conservative movement has been penetrated by Israeli intelligence, at the level of human intelligence and technology contracting.}
This is particularly so as Defendant failed to adhere to any journalistic practices at all or take any meaningful measures to ascertain the veracity of his statements. The jury could have reasonably believed so for the additional reason that Defendant insisted Apelbaum a spy while plainly rejecting the Arizona Republic article stating that there was no evidence of Apelbaum being such. Eramo ("A verdict for the plaintiff has been upheld when a reporter's own notes showed that she was aware of facts contradicting her story")….
The court therefore upheld the verdict, but reduced the jury award to $200K:
The Court would not doubt the validity of a singular jury award of $75,000 compensatory and $[125],000 punitive damages in case, given the Supreme Court of Virginia's emphasis that a "substantial" compensatory recovery may be had in a defamation case absent proof of injury and that a sizable punitive damages award may be appropriate punishment for "egregious conduct" without actual damages as well.
But the jury award here of $800,000 is manifestly excessive and bears no relation or proportion to the evidence presented at trial and the nature of this case. And the Court discerns that it was spurred by an unusual sort of duplication created by Plaintiffs. The special verdict form provided to the jury was based on a form jointly submitted by the parties and originally drafted by Plaintiffs. The form provided eight separate spaces for the jury to separately indicate the amount of compensatory damages and punitive damages awarded to each plaintiff for each of two statements in the First Article. In spite of such, in closing (the only instance in which Plaintiffs' counsel addressed damages figures), Plaintiffs' counsel made no such delineations. Counsel rather asked the jury to simply "award Mr. Apelbaum and his company $300,000 in compensatory damages, and we're also asking you to further award Mr. Apelbuam and his company $300,000 in punitive damages."
Plaintiffs' counsel never explained how the jury was to break down damages between the plaintiffs and the statements and never attributed distinct harms or effects to each plaintiff and statement at any time at trial. Moreover, the amounts awarded, when summed up, far exceed what Plaintiffs' counsel even asked for at trial and the jury awarded the same $75,000 / $125,000 split over each plaintiff and statement.
Based on all of this, the Court concludes that, in accord with Plaintiffs' counsel's one-compensatory figure, one-punitive-figure argument, the jury intended to award Plaintiffs a singular, total amount of $75,000 in compensatory damages and $125,000 in punitive damages, for a total of $200,000.
Accordingly, the Court remits the damages award to $75,000 in compensatory damages and $125,000 in punitive damages and will order Plaintiffs to, within fourteen days, accept this remitted award or submit to a new trial on the issues of damages only….
I'm skeptical of the court's conclusion that the speech wasn't on a matter of public concern, but the rest of the analysis seems reasonable.
Timothy Hyland and Jamie Michelle Hertz (Hyland Law PLLC) and John C. Burns (Burns Law Firm) represent Plaintiffs.
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