Friedman v. Bloomberg L.P., 16-1335-cv. August Term, 2016.

• Decision Date: 12 September 2017
• Docket Number: No. 16-1335-cv. August Term, 2016.,16-1335-cv. August Term, 2016.
• Citation: 871 F.3d 185
• Parties: Dan FRIEDMAN, Plaintiff–Appellant v. BLOOMBERG L.P., Christopher Dolmetsch, Erik Larsen, Michael Hytha, Andrew Dunn, Milltown Partners, Patrick Harversen, D.J. Collins, Oliver Rickman, Palladyne International Asset Management B.V., Ismael Abudher, Lily Yeo, Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

871 F.3d 185

Dan FRIEDMAN, Plaintiff–Appellant
v.
BLOOMBERG L.P., Christopher Dolmetsch, Erik Larsen, Michael Hytha, Andrew Dunn, Milltown Partners, Patrick Harversen, D.J. Collins, Oliver Rickman, Palladyne International Asset Management B.V., Ismael Abudher, Lily Yeo, Defendants–Appellees.

No. 16-1335-cv. August Term, 2016.

United States Court of Appeals, Second Circuit.

Argued: October 31, 2016
Decided: September 12, 2017

871 F.3d 189

Alan H. Kaufman , Kaufman PLLC, New York, NY (Stephen G. Grygiel, Silverman, Thompson, Slutkin & White, LLC, Baltimore, MD, on the brief) for Plaintiff-Appellant.

Sharon L. Schneier (Yonatan S. Berkovits, on the brief), Davis Wright Tremaine LLP, New York, NY, for Defendants-Appellees Bloomberg L.P., Christopher Dolmetsch, Erik Larsen, Michael Hytha, and Andrew Dunn.

Derek J.T. Adler , Hughes Hubbard & Reed LLP, New York, NY, for Defendants-Appellees Palladyne International Asset Management B.V., Ismael Abudher, Lily Yeo, Milltown Partners LLP, Patrick Haverson, David-John Collins and Oliver Rickman.

Before: Walker, Hall, and Chin, Circuit Judges.

John M. Walker, Jr., Circuit Judge:

Plaintiff-appellant Dan Friedman appeals from a decision of the United States District Court for the District of Connecticut (Alvin W. Thompson, J. ) dismissing his defamation action and entering judgment in favor of the defendants-appellees. At issue in this case is whether Connecticut General Statute § 52–59b —which provides for long-arm jurisdiction over certain out-of-state defendants except in defamation actions—violates Friedman's First or Fourteenth Amendment rights. We conclude that it does not and AFFIRM the district court's dismissal of this action as to the out-of-state defendants. We also consider whether the allegedly defamatory statements at issue in this case, which were reported and published by the remaining defendants, are privileged under New York Civil Rights Law § 74 as a fair and true report of judicial proceedings or are protected expressions of opinion. We AFFIRM in part and REVERSE in part the district court's determinations regarding these statements and REMAND this action for proceedings against the remaining defendants consistent with this opinion.

BACKGROUND

This defamation action arises out of a news article published by Bloomberg News that reported on a lawsuit Friedman filed against his former employer, Palladyne International Asset Management, and others. Friedman alleged in the lawsuit that Palladyne, a purported hedge fund based in the Netherlands, fraudulently induced him into working as its "head of risk" in order to create the appearance that it was a legitimate company. Friedman claimed that, over the course of nearly eight months, Palladyne and an executive recruiting firm made numerous misrepresentations to persuade him to accept this position, including that Palladyne was "a diversified investment company" with a "worldwide clientele" and "consistent, optimized returns." App'x at 15, 49, 61.

In November 2011, Friedman moved to the Netherlands and began working for Palladyne. According to Friedman, he soon discovered that Palladyne was a "kickback and money laundering operation for the former dictatorial Ghaddafi [sic ] regime in Libya," App'x at 39, and that Palladyne's primary purpose was to channel funds at the behest of the then-head of Libya's state-run National Oil Company, who was the father-in-law of Palladyne's chief executive officer. Friedman also learned that the United States Department of Justice and the Securities and Exchange Commission were conducting investigations that implicated Palladyne. In February 2012, after Friedman voiced concerns to a colleague that Palladyne was not engaging in legitimate investment activities and could face criminal exposure, he was "abruptly

871 F.3d 190

terminated with no legally cognizable explanation." App'x at 75.

On March 25, 2014, Friedman sued Palladyne and the firm that had recruited him for the position, as well as several of their employees. Friedman asserted seven counts in his complaint, including fraudulent inducement, and sought monetary damages totaling $499,401,000, plus interest, attorneys' fees and costs. He also sought, as additional punitive damages, two years of the employee defendants' salaries and bonuses. Friedman requested that "this Court enter judgment on all Counts for the plaintiff." App'x at 88.

On March 27, 2014, Bloomberg L.P. published online the article at issue in this case. Entitled "Palladyne Accused in Suit of Laundering Money for Qaddafi," the article reported on Friedman's lawsuit. Friedman responded to this article by filing the instant defamation action against (1) Bloomberg L.P. and the authors and editors of the article (collectively, the "Bloomberg Defendants"); (2) the Netherlands-based Palladyne and two of its senior officers (collectively, the "Palladyne Defendants"); and (3) Milltown Partners, LLP—a public relations company based in the United Kingdom that worked for Palladyne and allegedly was a source of information for the article—and several of its employees (collectively, the "Milltown Defendants").

Friedman alleged that the following statements in the article were false and caused him serious and irreparable harm:

(1) A statement that "[Palladyne] was sued in the U.S. for as much as $500 million."

(2) A quote from Palladyne that "[t]hese entirely untrue and ludicrous allegations [in Friedman's earlier lawsuit] have been made by a former employee who has repeatedly tried to extort money from the company.... He worked with us for just two months before being dismissed for gross misconduct."

App'x at 19, 37-38. Friedman further alleged that the Bloomberg Defendants negligently published these statements without contacting him for a response or otherwise verifying their accuracy, and acted with reckless disregard by failing to correct or retract the statements even after his lawyer alerted several of the Bloomberg Defendants to their inaccuracy.¹

The Milltown and Palladyne Defendants moved to dismiss this case pursuant to Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction and 12(b)(6) for failure to state a claim. In granting the motion, the district court concluded that Conn. Gen. Stat. § 52–59b, which provides for jurisdiction over non-resident individuals, foreign partnerships, and foreign voluntary associations except in defamation cases, deprived it of personal jurisdiction over the Milltown and Palladyne Defendants, all of which are foreign entities. The district court further determined that even if Palladyne—organized under the laws of the Netherlands as a besloten vennootschap —were categorized as a corporation and not a foreign partnership, Conn. Gen. Stat. § 33–929 would deprive it of personal jurisdiction over Palladyne.

The Bloomberg Defendants also filed a motion to dismiss the complaint pursuant to Rule 12(b)(6) for failure to state a claim, which the district court granted. The district court held that the statement that

871 F.3d 191

Friedman had sued Palladyne for "as much as $500 million" was protected by N.Y. Civ. Rights Law § 74 because it was a fair and true report of Friedman's complaint and that the statement that Friedman "has repeatedly tried to extort money from [Palladyne]," while not covered by the same privilege, was a protected expression of opinion. Friedman timely appealed the dismissal of his complaint.

DISCUSSION

Friedman argues on appeal inter alia that (1) the district court has personal jurisdiction over the individual Milltown and Palladyne Defendants pursuant to Conn. Gen. Stat. § 52–59b because the statute's exclusion of defamation actions is unconstitutional² ; (2) the "for as much as $500 million" statement is defamatory because it fails to clarify that he could not have been awarded this amount even if his lawsuit were successful; and (3) the "repeatedly tried to extort money" statement suggests that he engaged in criminal conduct and implies undisclosed facts that are detrimental to his character.

I. Connecticut General Statute § 52-59b

We review de novo an appeal from a district court's dismissal for lack of personal jurisdiction. Whitaker v. Am. Telecasting, Inc. , 261 F.3d 196, 208 (2d Cir. 2001). The plaintiff bears the burden of demonstrating that the court has personal jurisdiction over each defendant. Id. In determining whether such jurisdiction exists, a court "must look first to the long-arm statute of the forum state.... If the exercise of jurisdiction is appropriate under that statute, the court must decide whether such exercise comports with the requisites of due process." Id. at 208 (citation omitted). The relevant long-arm statute, Conn. Gen. Stat. § 52–59b(a), provides:

[A] court may exercise personal jurisdiction over any nonresident individual, foreign partnership or foreign voluntary association ... who in person or through an agent ... (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious act outside the state causing injury to person ... within the state,

...