The decision followed a three-week trial in U.S. District Court in Charlottesville, Virginia, where the administrator, Nicole Eramo, sued the magazine, owner Wenner Media and reporter Sabrina Erdely for $7.9 million.
Erdely was found liable of actual malice, a key element in U.S. libel law, in six statements in the November 2014 story, "A Rape on Campus." Rolling Stone and Wenner Media were each found liable of actual malice in three statements, according to court documents.
To prove defamation under U.S. libel laws, it must be shown that a media organization published what it knew to be false, or did so with reckless disregard for the truth.
The magazine had reported that a female student identified as Jackie was raped at a university fraternity in 2012. Rolling Stone retracted the story in April 2015 after inconsistencies in the account arose and police found no evidence of an attack. It was an embarrassing blow to the magazine founded by Jann Wenner in 1967.
Sex assaults remain a major concern on U.S. college campuses, with some reports estimating that one in five female students will be victims of sex assault during their college years.
Eramo, who was then an associate dean of students, accused the magazine of portraying her as unfeeling about the alleged assault and concerned only about hushing up reports of sexual assault.
In a statement, Rolling Stone spokeswoman Kathryn Brenner said: "We deeply regret these missteps and sincerely apologize to anyone hurt by them, including Ms. Eramo."
Eramo claimed that the story had damaged her health, reputation and career. She now works in an administrative role at the university.
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