Kesner v. Dow Jones & Co.

• Citation: 515 F.Supp.3d 149
• Decision Date: 26 January 2021
• Docket Number: 20 Civ. 3454 (PAE)
• Parties: Harvey J. KESNER, Plaintiff, v. DOW JONES & COMPANY, INC. d/b/a Barron's, William "Bill" Alpert, and Teri Buhl, Defendants.
• Court: U.S. District Court — Southern District of New York

515 F.Supp.3d 149

Harvey J. KESNER, Plaintiff,

v.DOW JONES & COMPANY, INC. d/b/a Barron's, William "Bill" Alpert, and Teri Buhl, Defendants.

20 Civ. 3454 (PAE)

United States District Court, S.D. New York.

Signed January 26, 2021

Robert Craig Buschel, Robert C. Buschel, Buschel Gibbons, P.A., Fort Lauderdale, FL, Steven S. Biss, Law Office of Steven S. Biss, Charlottesville, VA, for Plaintiff.

Kendall Obreza Pfeifer, Shullman Fugate PLLC, Tamp, FL, Rachel Elise Fugate, Shullman Fugate PLLC, West Palm Beach, FL, Gregory R. Naron, Pro Hac Vice, Jacqueline A. Giannini, Pro Hac Vice, Natalie J. Spears, Pro Hac Vice, Dentons US LLP, Chicago, IL, for Defendant Barron's, Inc.

Wesley Josiah Paul, Paul Law Group, LLP, New York, NY, for Defendant Teri Buhl.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

This case involves defamation claims arising out of press coverage of plaintiff Harvey Kesner ("Kesner") by defendants Dow Jones & Company, Inc. ("Dow Jones" or "Barron's "), William Alpert ("Alpert"), and Teri Buhl ("Buhl"). Kesner is an attorney whose former law firm, Sichenzia Ross Ference LLP, represented three public companies embroiled in an alleged pump-and-dump stock-selling scheme that became the subject of an investigation by the Securities and Exchange Commission ("SEC"). Defendants published articles concerning the firm and Kesner's potential involvement in the scheme. Kesner now sues them for defamation, commercial disparagement, deceptive and unfair trade practices, tortious interference with contract, and common law conspiracy.

Now pending are two motions to dismiss: one by Dow Jones and its reporter, Alpert, Dkt. 43 ("Dow Jones Mem."), and the other by Buhl, Dkt. 105 ("Buhl Mem."). For the following reasons, the Court grants Dow Jones's and Alpert's motions, and grants in part and denies in part Buhl's motion.

I. Background

A. Factual Background¹

1. Parties

Kesner is a lawyer and member of the State Bar of New York. Am. Compl. ¶ 37. Between 1982 and 2018, Kesner's legal practice focused on securities law and other financial matters. Id. Until 2018, he was a partner at Sichenzia Ross Ference Kesner LLP (now Sichenzia Ross Ference LLP). Id. Since 2016, Kesner has resided in Florida. Id. ¶¶ 9, 37.

Barron's is a weekly publication of Dow Jones aimed at financial professionals. Id. ¶¶ 39, 41. Dow Jones publishes Barron's both in print and online at www.barrons.com. Id. Dow Jones is a Delaware corporation with its principal place of business in New York. Id. ¶ 39. Alpert has been a financial journalist and editor for Barron's since 1984. Id. ¶ 40. He is a citizen of New Jersey. Arg. Tr. at 29.

Buhl is an investigative journalist who focuses on financial reporting. Am. Compl. ¶ 24; Buhl Mem. at 1. She operates a website: "Teri Buhl Smashmouth Investigative Journalism," www.teribuhl.com. Am. Compl. ¶ 24. Buhl is a citizen of New York. Id. ¶ 42.

2. The Challenged Publications and Statements

a. Background

For years, Buhl has been covering the exploits of investor Barry Honig and his associates in the small- and micro-cap stock markets. As synopsized by Alpert: "Honig ... [has] been the subject of dogged investigation by independent journalist Teri Buhl, who self-publishes her work and had to defend against two lawsuits filed by Honig over her stories, including a libel suit Honig dropped." Bill Alpert, SEC Charges Against Phillip Frost Might Just Be the Tip of the Iceberg , Barron's (Sept. 10, 2018), https://www.barrons.com/articles/sec-charges-phillip-frost-1536608366; see also Am. Compl. ¶¶ 3 n.1, 53 (incorporating the article by reference).

Buhl began writing in earnest about Kesner in August 2018, following his announced retirement from his firm law, then-named Sichenzia Ross Ference Kesner LLP. See Dkt. 111-2 ("Aug. 29, 2018 Art."). Her focus as to Kesner was his relationship with Honig. As Buhl reported at the time, Honig was the subject of multiple SEC investigations, including for participating in alleged pump-and-dump schemes in which Honig and affiliates had allegedly engaged in stratagems to artificially drive up corporate stock prices and then to sell their stakes before the stock prices collapsed. In describing the Honig-Kesner relationship, Buhl reported that Kesner had served as counsel both to investor Honig and to issuers in which Honig had invested. Her articles raised questions about whether Kesner's connections to Honig had led him to disserve the interests of his corporate clients. Buhl's articles also questioned the extent to which Kesner—who was an owner of the stock-transfer agent used in a number of Honig's investments, Equity Stock Transfer—had controlled the agent's relevant conduct. After the removal of Kesner's name from his law firm, Buhl speculated about whether the SEC might bring charges against either or both men.

Shortly thereafter, on September 7, 2018, the SEC took enforcement action. It filed suit in this District, alleging that Honig and his associates, including Phillip Frost, Michael Brauser, Elliot Maza, and Brian Keller, had carried out pump-and-dump schemes to manipulate the stock of three public companies. See SEC Compl. The SEC Complaint did not identify these companies by name, referring to them instead as companies A, B, and C. See id. ; see also Am. Compl. ¶ 2. Since the filing of the SEC's Complaint, however, two of the three companies, MGT Capital Investments, Inc. ("MGT") and MabVax Therapeutics Holdings, Inc. ("MabVax"), have identified themselves in their public filings.² And reporters Alpert and Buhl have publicly identified the third company as Biozone Pharmaceuticals, Inc. ("BioZone"). See Dkts. 111-1, 111-8. The SEC Complaint alleged that between 2013 and 2018, Honig and his associates had touted the companies’ stock, causing their stock prices to rise, as part of a manipulative trading scheme. SEC Compl. ¶ 3. Once the prices had risen, the SEC alleged, Honig and his associates then "dumped" the stock, leaving remaining investors with stock that was virtually worthless. Id. ¶ 9. On March 8, 2019, the SEC filed an amended complaint against the approximately 20 defendants. See Am. Compl. ¶ 47. Neither Kesner nor anyone at his law firm was named as a defendant in either SEC complaint. Id. ¶¶ 2, 48–49.

On October 4, 2018, Barron's published an online article, authored by Alpert, headlined, "The Lawyer at the Center of the SEC Pump-and-Dump Case." Dkt. 111-1 ("Barron's Art."). Alpert reported that although Kesner had been "unmentioned" in the SEC Complaint, he or someone at his former firm had represented all three companies implicated in the SEC Complaint. Alpert's article further reported that one such company, MabVax, was suing Kesner and his former firm for malpractice in connection with their alleged role in Honig's scheme, and questioned Kesner's ties to Equity Stock Transfer.

Between October 2018 and August 2019, Buhl published numerous articles on Honig's schemes and the related SEC investigations. Many referenced Kesner, sometimes tangentially and sometimes in great depth. Buhl reported on the Financial Industry Regulatory Authority's ("FINRA") investigation into whether small-cap broker-dealer Laidlaw & Company had assisted Honig in stock manipulation. Dkt. 111-6 ("Oct. 31, 2018 Art."). She explained that certain Laidlaw executives had been accused of executing the "dump" portion of Honig's pump-and-dump schemes. Buhl followed developments in the SEC's case involving the manipulation of the stock prices of BioZone, MabVax, and MGT, promptly reporting, for example, when Elliot Maza, BioZone's former CEO, and Brian Keller, its former Chief Scientific Officer, settled with the SEC. Dkt. 111-7 ("Mar. 26, 2019 Art."). Buhl also reported on a lawsuit between BioZone founder Daniel Fisher and Honig and a number of his associates. Kesner, according to Buhl's articles, had represented a number of the defendants, whom Buhl collectively termed "Team Honig." Buhl also wrote multiple articles on lawsuits brought by MabVax: one against Honig and associates, Dkt. 111-5 ("Apr. 11, 2019 Art."), and another, for malpractice, against Kesner and his former law firm, Dkt. 111-3 ("May 4, 2019 Art."). When the SEC moved to compel documents from MGT, Buhl covered the motion and identified the individuals about whom the SEC was seeking information. Dkt. 111-4 ("Aug. 29, 2019 Art.").

Buhl also examined other deals in which Kesner had served as counsel beyond those involving the companies allegedly involved in the pump-and-dump schemes. Dkt. 111-9 ("June 7, 2019 Art."). She reported that Kesner assisted a client, Andy Defrancesco, in a "questionable" deal involving the moving of Defrancesco's "hidden shares" in a cannabis company. Buhl covered this deal on both her blog and in another outlet, Cannabis Law Report.

b. The Barron's Article

On October 4, 2018, Alpert published the Barron's article at issue here, headlined, "The Lawyer at the Center of the SEC Pump-and-Dump Case." Am. Compl. ¶ 8. It is undisputed that the headline referred to Kesner. Kesner contends that the Barron's article expressly and impliedly accused him of securities fraud, and that the headline's description of him as at the "center" of the SEC's case was, separately, defamatory. Id. ¶ 20.

The Barron's article reported that Kesner and/or his law firm had been counsel to all three companies whose stock prices were manipulated in Honig's pump-and-dump schemes. See Barron's Art. at 1 ("Unmentioned in the SEC's case is how all three public companies in the alleged swindles used the same securities law firm and two of the three used the same stock transfer agency."). It further reported that two of the companies "also happened to use Equity Stock Transfer, a New York outfit that SEC registrations show was financed and controlled by Kesner."

Although the SEC Complaint had not named any of the companies, the Barron's article identified one as MabVax. The article reported that MabVax had sued Sichenzia Ross Ference for...