Broidy Capital Mgmt. LLC v. Muzin

• Decision Date: 31 March 2020
• Docket Number: No. 19-cv-0150 (DLF),19-cv-0150 (DLF)
• Parties: BROIDY CAPITAL MANAGEMENT LLC, et al., Plaintiffs, v. NICHOLAS D. MUZIN, et al., Defendants.
• Court: U.S. District Court — District of Columbia

BROIDY CAPITAL MANAGEMENT LLC, et al., Plaintiffs, v. NICHOLAS D. MUZIN, et al., Defendants.

No. 19-cv-0150 (DLF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

March 31, 2020

MEMORANDUM OPINION

Plaintiffs Broidy Capital Management, LLC (BCM) and Elliott Broidy (together, "Broidy") brought this suit against several foreign agents of Qatar: Nicolas Muzin, Joseph Allaham, Gregory Howard, and Stonington Strategies, LLC (a company founded by Muzin and Allaham). First Am. Compl. ("Complaint"), Dkt. 18 ¶¶ 11-18. Broidy alleges that the defendants joined a "Qatari Enterprise," which conspired against him to hack his computers and disseminate the hacked information to the media in retaliation for Broidy's anti-Qatari advocacy. Id. ¶¶ 1-2, 199. He brings thirteen counts against each of the defendants alleging violations of both federal and California law. Before the Court are Muzin and Stonington's Motion to Dismiss the First Amended Complaint, Dkt. 40; Howard's Motion to Dismiss the First Amended Complaint, Dkt. 41; and Allaham's Motion to Dismiss the First Amended Complaint, Dkt. 42. For the reasons that follow, the Court will grant in part and deny in part the defendants' motion to dismiss.

I. BACKGROUND

A. The Parties

Plaintiff Elliott Broidy is an outspoken critic for the State of Qatar and its sponsorship of terrorist organizations. Complaint ¶ 1. He resides in California and is the Chief Executive Officer for BCM, a California corporation with its principal place of business in Los Angeles. Id. ¶ 11.

The defendants are U.S. citizens and agents of Qatar. Id. ¶¶ 13-18. Muzin resides in Maryland and serves as the CEO for Stonington, a public relations consulting firm based in Washington D.C. and organized under the laws of Delaware. Id. ¶¶ 13, 18. On August 24, 2017, Muzin was retained by Qatar for consulting services. Id. ¶ 15. Stonington registered under the Foreign Agents Registration Act (FARA) as a foreign agent for Qatar on September 3. Id. ¶ 18.

Allaham is a New York resident and the co-founder of Stonington. Id. ¶ 16. He frequently conducts business for Stonington in D.C. and has worked for Qatar as a foreign agent. Id. Allaham originally worked as an unregistered foreign agent, until he filed a belated registration statement under FARA in response to a subpoena from Broidy on June 15, 2018. Id. ¶¶ 16, 69.

Howard is a Maine resident and media placement expert who worked at Conover & Gould (Conover), a firm based in D.C. Id. ¶ 17. He worked as a registered foreign agent of Qatar through Conover from July 2017 through January 18, 2018. Id. Howard now works as a Vice President for another D.C.-based public strategy firm, Mercury Public Affairs. Id.

B. Broidy Critiques Qatar

In June 2017, several neighboring Middle Eastern states severed diplomatic relations with Qatar and imposed an economic blockade and embargo against the country because of its supportfor terrorism and close ties to Iran. Id. ¶ 42. The international sanctions were supported by the United States and have hurt the Qatari economy. Id. ¶ 43. Beginning in early 2017, Broidy became a vocal critic of Qatar's support for terrorists and friendly relationship with Iran. Id. ¶ 46. He has regularly conveyed his criticism in meetings with United States officials, and on the issue of Qatari terrorism, he directly conferred with the President of the United States. Id. ¶ 47. The President criticized Qatar in a June 2017 meeting of the Republican National Committee, and during that meeting he stated to the audience: "Elliott Broidy is fantastic." Id. ¶¶ 48-49. Broidy's theory is that Qatar has formed a "Qatari Enterprise" with the chief goal of ending the sanctions against Qatar—in part by improving Qatar's reputation in the United States. Id. ¶¶ 50-51. Targeting Broidy in response to his criticism was allegedly part of this effort. Id. ¶¶ 73-77.

C. Qatar Hires the Defendants

In the fall of 2017, Muzin and Allaham began working for Qatar alongside Jamal Benomar. Id. ¶ 53. Benomar coordinated payments from Qatar to Muzin and Allaham. Id. ¶ 54. In late August 2017, the Qatari Embassy officially retained Stonington and Muzin to influence public opinion regarding Qatar. Id. ¶ 55. Allaham also began working for Qatar in 2017 for the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, and his brother, Sheikh Mohamad bin Hamad Al Thani. Id. ¶ 56. Benomar was in close contact with Muzin and Allaham, holding approximately fifty phone calls over the relevant time period and establishing a group chat for the three of them to talk about business. Id. ¶ 76.

Muzin admitted to Broidy's associate, Joel Mowbray, that he identified and described Broidy as an impediment to Qatar in his weekly meetings at the Qatari Embassy. Id. ¶¶ 73-74. Muzin stated that "Broidy's name comes up in Embassy meetings often," and Muzin "definitelyidentified [Broidy] as somebody who, was not, didn't like them too much." Id. ¶ 75. Muzin further admitted that his Qatari clients "knew about [Broidy]" and "knew that [Broidy] had been influential in shaping the White House's views on Qatar." Id.

D. BCM's Servers Are Hacked

Starting in January 2018, Broidy and the BCM servers were hacked, allegedly by international cyber security firm Global Risk Advisors (GRA). Id. ¶¶ 77-78. On information and belief, Broidy believes that the Qatari Enterprise retained GRA for the hack, that GRA opened a subsidiary in Qatar, and that GRA knew the cyber hack was done for the benefit of Qatar. Id. ¶¶ 79-85. In laying the groundwork for the ultimate hack, hackers targeted Broidy's spouse Robin Rosenzweig with a spear phishing email on December 27, 2017 and gained control of her Gmail account on or around January 3, 2018. Id. ¶¶ 86-90. They then did the same to Broidy's executive assistant on or around January 14, 2018. Id. ¶¶ 91-95. Further, the hackers unsuccessfully targeted Mowbray around that time. Id. ¶ 96.

BCM has an exchange server physically located in Los Angeles, California. Id. ¶ 97. Hackers gained access to this server on January 16, 2018 and maintained unauthorized access to the BCM email server until at least February 25, 2018. Id. ¶¶ 98-99. Some of those hacking attempts came from Qatar and others were allegedly masked by VPN connections. Id. ¶¶ 100-06. Broidy alleges that other outspoken critics of Qatar have been targeted by the hacking scheme as well. Id. ¶ 108-09. On March 13, 2018, Allaham wrote to Muzin that "Benomar had gone to Qatar prior to the date of the message 'to get the emails. That [sic] what I think he was doing there [in Qatar].'" Id. ¶ 111. Muzin responded by referencing Broidy by name. Id.

E. The Hacked Materials are Disseminated

From January 18, 2018 through May 22, 2018, Howard had extensive contacts with bothmembers of the Qatari Enterprise and reporters working on stories about Broidy that were based on materials stolen from the BCM servers. Id. ¶¶ 115, 119. Phone records show that he was in close and consistent contact with reporters before they began publishing stories about Broidy. Id. ¶¶ 117, 119-133. Between March 1, 2018 and May 21, 2018, stories about Broidy based on the stolen emails appeared in the Wall Street Journal, New York Times, the Associated Press, Bloomberg, McClatchy, and the Huffington Post. Id. ¶¶ 121, 123, 126, 141-42, 144, 152.

Meanwhile, and shortly after the cyberattack on January 25, Muzin sent Allaham a message stating "It's very good. . . . We got the press going after Broidy. I emailed you." Id. ¶ 140. While Muzin was in Qatar that day, a reporter from McClatchy reached out to Muzin about a story they were working on regarding Broidy. Id. ¶ 141. Muzin forwarded the message to Allaham and commented, "Time to rock." Id. On February 28, Muzin called Mowbray and informed him that the Times was about to publish a story about Broidy and George Nader, saying that he received this information from his "media guy." Id. ¶ 145. Broidy believes that Muzin's "media guy" is Howard. Id. ¶ 146. On March 13, Muzin messaged Allaham to say that recent news stories about Broidy have "[p]ut[] him in [M]ueller['s] crosshairs." Id. ¶ 147. The next day, Muzin also told Allaham that he'd "get some intel about the Broidy event soon," likely referring to a March 13 Republican fundraiser where Broidy was listed as an event host. Id. ¶ 149. On March 15, Muzin messaged Allaham, "Elliott Broidy was not at the fundraiser!" Id. ¶ 150. Finally, on May 4, following another Qatari agent's meeting with a Wall Street Journal reporter, Muzin told Allaham that "our new friends can make Broidy go away altogether." Id. ¶¶ 153-56.

F. The Defendants Are Paid and Continue to Talk

Muzin received a total of $3.9 million in September and October 2017 from an alter egoof Qatar, BlueFort Public Relations, LLC. Id. ¶¶ 161-63. Of that $3.9 million, Muzin gave $2.3 million to Allaham for "services rendered." Id. ¶ 164. Muzin then received a pay raise from Qatar that coincided with the timing of the cyberattack, and Broidy alleges that Muzin and Allaham's total compensation of over $7 million from Qatar "far exceed[s] the prevailing market rates for lobbying or political action." Id. ¶¶ 165-69.

Between February 27, 2018 and March 8, 2018, Muzin met with Mowbray on three separate occasions. Id. ¶ 171-72. During the first of those meetings, Muzin demonstrated foreknowledge of impending news stories about Broidy. Id. ¶¶ 174-76.

During the second meeting on March 5, he stated that there was "a lot more coming" from the Times and that Broidy was "in deep shit." Id. ¶ 178. Muzin further stated that "there may be hacking stuff in there," and that "'it's possible' that Qatar had hacked his own phone and email accounts, and in fact that 'it's possible they try to hack people.'" Id. ¶ 179. He told Mowbray that, regarding his association with Broidy: "'Honestly, you should be a little bit concerned about this. . . . You should (have a lawyer) because you're very well-known and influential' as someone with an...