Nat'l Jewish Democratic Council v. Adelson

• Decision Date: 30 September 2019
• Docket Number: 18-CV-8787 (JPO)
• Citation: 417 F.Supp.3d 416
• Parties: NATIONAL JEWISH DEMOCRATIC COUNCIL and Marc R. Stanley, Plaintiffs, v. Sheldon G. ADELSON, Defendant.
• Court: U.S. District Court — Southern District of New York

417 F.Supp.3d 416

NATIONAL JEWISH DEMOCRATIC COUNCIL and Marc R. Stanley, Plaintiffs,

v.Sheldon G. ADELSON, Defendant.

18-CV-8787 (JPO)

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

Signed September 30, 2019

Andrew K. Jondahl, Ashok Chandran, Ogilvie Andrew Fraser Wilson, Richard D. Emery, Emery Celli Brinckerhoff & Abady, LLP, New York, NY, for Plaintiffs.

Lee A. Armstrong, James Matthew Gross, New York, NY, for Defendant.

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

This case arises out of a prior defamation suit filed by Sheldon G. Adelson against the National Jewish Democratic Council and its chair, Marc R. Stanley. This Court dismissed the suit under Nevada law for being a so-called "SLAPP" — a strategic lawsuit against public participation. The Council and Stanley now seek compensatory and punitive damages for the prior suit, as well as attorney's fees for this separate action. They have moved for partial summary judgment on the issue of liability. Adelson, on the other hand, has moved to dismiss under both Rule 12(b)(6) and Nevada's anti-SLAPP statute.

For the reasons that follow, Adelson's motions to dismiss are denied. Plaintiffs' motion for summary judgment is granted, but only on the issue of liability for compensatory damages and attorney's fees.

I. Background

Unless otherwise indicated, the following facts are undisputed.

Defendant Sheldon G. Adelson is a prominent businessperson. (See Dkt. No. 15 ("Compl.") ¶¶ 10, 21.) He is also the chairman and CEO of Las Vegas Sands Corporation, which owns and operates casinos throughout the world. (See Compl. ¶ 10.) During the 2012 presidential election cycle, Adelson provided financial support to various Republican candidates. (Compl. ¶ 21.)

Plaintiff National Jewish Democratic Council is a 501(c)(4) nonprofit organization whose goal is to maximize Jewish support for Democratic candidates. (Compl. ¶ 26.) Its chair is Plaintiff Marc R. Stanley. (Compl. ¶ 5.) In July 2012, during the presidential campaign, the Council published a statement on its website that encouraged Mitt Romney to stop accepting money from Adelson. (See Compl. ¶ 28.) The statement included the allegation, taken from news sources, that Adelson "personally approved" of prostitution in his Macau casinos. (Id. )

In response, Adelson sued the Council, Stanley, and David Harris (the Council's CEO) for defamation. The defendants moved to dismiss under Nevada's anti–strategic lawsuit against public participation ("anti-SLAPP") statute. This Court granted the motion to dismiss and awarded attorney's fees and costs to the defendants. See Adelson v. Harris , 973 F. Supp. 2d 467, 504 (S.D.N.Y. 2013), aff'd , 876 F.3d 413, 415 (2d Cir. 2017).

Plaintiffs Stanley and the Council now bring this action for damages. Under Nevada law, a litigant who succeeds on a motion to dismiss under Nevada's anti-SLAPP statute "may bring a separate action to recover: (1) [c]ompensatory damages; (2) [p]unitive damages; and (3) [a]ttorney's fees and costs of bringing the separate action." Nev. Rev. Stat. § 41.670(1)(c). Accordingly, Plaintiffs have moved for partial summary judgment on the issue of liability.

Defendant Adelson has moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). He has also moved to dismiss under Nevada's anti-SLAPP statute, arguing that his original lawsuit was protected conduct under the statute. For the reasons that follow, both of Adelson's motions to dismiss are denied. Plaintiffs' motion for summary judgment is granted on the issue of liability for compensatory damages and attorney's fees and denied on the issue of liability for punitive damages.

II. Legal Standards

To withstand a motion to dismiss under Rule 12(b)(6), a plaintiff must plead sufficient factual allegations "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is plausible if the well-pleaded factual allegations of the complaint, presumed true, permit the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

Summary judgment under Rule 56 is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. A fact is material if it "might affect the outcome of the suit under the governing law," Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and a dispute is genuine if, considering the record as a whole, a rational jury could find in favor of the nonmoving party, Ricci v. DeStefano , 557 U.S. 557, 586, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

Nevada's anti-SLAPP statute takes aim at strategic lawsuits against public participation, or SLAPPs, which "abuse the judicial process by chilling, intimidating, and punishing individuals for their involvement in public affairs." John v. Douglas Cty. Sch. Dist. , 125 Nev. 746, 219 P.3d 1276, 1281 (2009). In applicable cases, defendants may file a "special motion to dismiss," Nev. Rev. Stat. § 41.660(1)(a), which permits defendants to obtain dismissal of meritless actions without the time and expense of discovery. This motion bears a close resemblance to a motion for summary judgment: under the statute, a defendant obtains dismissal only if the plaintiff has failed to "demonstrate[ ] with prima facie evidence a probability of prevailing on the claim." Id. § 41.660(3)(b).

III. Discussion

Defendant Adelson has moved to dismiss under Rule 12(b)(6) and under Nevada's anti-SLAPP statute. Plaintiffs have moved for partial summary judgment.

A. Adelson's Motion to Dismiss under Rule 12(b)(6)

Adelson first moves for dismissal under Rule 12(b)(6). His principal contention is that Nevada's anti-SLAPP law is inapplicable in this lawsuit, both because its application would violate the Supremacy Clause and because its application would violate New York's choice-of-law rules. In addition, he argues that plaintiffs have straightforwardly failed to state a claim under the anti-SLAPP law.

1. Supremacy Clause

The Supremacy Clause provides that the Constitution and laws of the United States "shall be the supreme Law of the Land." U.S. Const. art. VI, cl. 2. Under the Clause, "the states have no power ... to retard, impede, burden, or in any manner control, the ... execution [of] the powers vested in the [federal] government." McCulloch v. Maryland , 17 U.S. (4 Wheat.) 316, 436, 4 L.Ed. 579 (1819). The Supremacy Clause has direct implications for the structural relationship between the states and the federal courts. For example, where Congress has provided for federal jurisdiction — and has therefore granted the right to sue in federal court — the states are "without power to take away this federal right" by "punish[ing] ... a federal-court litigant for pursuing his right to federal-court remedies." Donovan v. City of Dallas , 377 U.S. 408, 413–14, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964). A state court, then, lacks the authority to hold a litigant in contempt for bringing an action in federal court. See id. at 414, 84 S.Ct. 1579. More generally, any "state action, whether legislative or executive, necessarily calculated to curtail the free exercise of the right [to a federal forum] is void." Terral v. Burke Const. Co. , 257 U.S. 529, 532, 42 S.Ct. 188, 66 L.Ed. 352 (1922) ; cf. Railway Co. v. Whitton's Administrator , 80 U.S. (13 Wall.) 270, 286, 20 L.Ed. 571 (1871).

Adelson argues that the imposition of liability under Nevada's anti-SLAPP statute would be unconstitutional because it would infringe his right to a federal forum. He argues that Nevada's anti-SLAPP statute "punishes" a plaintiff for bringing federal litigation by awarding compensatory and punitive damages to a defendant who has successfully obtained dismissal. See Nev. Rev. Stat. § 41.670(1)(c) ; Dkt. No. 17 at 10–11.

This argument is fundamentally flawed. Simply put, it does not violate the Supremacy Clause for a federal court sitting in diversity to apply state substantive law. See Erie R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Adelson's original action was a claim under Nevada law for defamation. See Adelson , 973 F. Supp. 2d at 481. And in Nevada, if the defendant in a state-law defamation suit obtains dismissal under the state's anti-SLAPP statute, the defendant is entitled to compensatory and punitive damages. See Nev. Rev. Stat. § 41.670(1)(c). There is no doubt that the statute's damages provision — like its fee-shifting provision, see Adelson v. Harris , 774 F.3d 803, 809 (2d Cir. 2014) — is substantive in nature. Thus, a federal court sitting in diversity must apply it. See Erie , 304 U.S. at 78, 58 S.Ct. 817 ("[T]he law to be applied in any case is the law of the state."). In light of that command, it is difficult to understand Adelson's objection. How can that which is commanded by Erie fall afoul of the Supremacy Clause?¹

On this point, it is instructive to compare the anti-SLAPP statute's damages provision, see Nev. Rev. Stat. § 41.670(1)(c), with the neighboring provision requiring fee shifting, see id. § 41.670(1)(a). The two provisions are, in substance, identical. In the event of a successful anti-SLAPP dismissal, section 41.670(1)(a) authorizes the award of attorney's fees to the prevailing party, while section 41.670(1)(c) authorizes the award of compensatory and punitive damages to the prevailing party. Both provisions "punish" a litigant for bringing a lawsuit in violation of the anti-SLAPP statute.² Thus, in the face of a Supremacy Clause challenge, the two provisions must rise or fall together. And there is no question that the fee-shifting provision "unproblematic[ally]" applies in ...