Kesner v. Buhl

Background

Harvey J. Kesner sued Dow Jones & Company, William Alpert, and Teri Buhl over reporting about his former law firm’s representation of companies connected to an alleged pump-and-dump stock scheme investigated by the Securities and Exchange Commission. He asserted defamation, commercial disparagement, deceptive and unfair trade practices, tortious interference with contract, and common-law conspiracy.

The defendants moved to dismiss under Rule 12(b)(6), which tests whether a complaint alleges enough facts to support a legally plausible claim. The court applied New York law after concluding that New York had the most significant relationship to the dispute, even though Kesner had lived in Florida since 2016. The court emphasized Kesner’s New York legal practice and license, and the New York connections of the defendants and publications.

Dow Jones and Alpert

The court granted Dow Jones’s and Alpert’s motion in its entirety. It held that the Barron’s article did not plausibly defame Kesner. The article’s discussion of Kesner’s alleged failure as a securities-law “gatekeeper” fairly summarized allegations in a publicly filed malpractice complaint and did not adopt those allegations as fact. The article’s statement that another law firm had “terminated” Kesner was not defamatory because it did not imply misconduct and was also based on Kesner’s own earlier court complaint.

The court also rejected Kesner’s claim that the article’s overall message accused him of securities fraud. It found that the article accurately described publicly filed complaints and other facts that Kesner did not dispute. The headline, “The Lawyer at the Center of the SEC Pump-and-Dump Case,” was not independently actionable because it did not name Kesner and, read with the article, fairly described his connection to the events without stating that he was culpable. The court held that the headline and article were protected by New York’s fair-index and fair-report privileges. It therefore dismissed Kesner’s defamation claims against Dow Jones and Alpert and terminated them as defendants.

Buhl’s publications

The court granted in part and denied in part Buhl’s motion concerning defamation. It dismissed the challenges to most of Buhl’s articles and tweets. The court treated statements in the August 29, 2018 article as protected opinion because Buhl disclosed the facts underlying her speculation about a possible SEC action, improper stock transfers, and Kesner’s move to Florida. It also rejected claims based on statements that Kesner was “pushed out,” “removed,” or “forced” out of his former law firm because those statements did not, without more, imply misconduct.

The court likewise dismissed challenges to Buhl’s April 11, May 14, July 25, August 20, and August 21, 2019 publications. It found that several statements were accurate reports or protected speculation, that some statements did not refer specifically to Kesner, and that the July 25 tweet did not suggest that Kesner was responsible for an attack on Buhl’s website. The court also held that the August 20 article and related tweets merely reported an SEC motion to compel and speculated that a filing could show an investigation.

Three portions of Buhl’s reporting survived dismissal. First, the October 31, 2018 article’s description of Kesner as part of Honig’s “crew of alleged bad actors” plausibly alleged defamation because it could accuse Kesner of wrongdoing, and Kesner alleged falsity, gross negligence, and damages. Second, the March 27, 2019 tweet plausibly accused Kesner and Honig of “illegal back room deals and intimidation.” Third, the June 7, 2019 article stated that emails by Kesner could show that insiders skirted beneficial-ownership rules and that Kesner pushed shares through the clearing system; the court found those statements could imply intentional participation in questionable or illegal transactions. The court concluded that discovery was needed to assess the truth of the June 7 statements and reserved the headline’s fair-index issue for summary judgment.

Other claims and disposition

The court dismissed Kesner’s commercial-disparagement, deceptive-and-unfair-trade-practices, and tortious-interference claims against all defendants because they relied on the same statements and alleged the same reputational injuries as the defamation claims. It also dismissed the civil-conspiracy claim against all defendants because New York recognizes no independent tort of conspiracy, and the complaint did not plausibly allege an agreement or coordinated plan. Parallel reporting and links between publications were not enough to show an agreement.

The court’s final disposition was: (1) Dow Jones’s and Alpert’s motion to dismiss was granted in its entirety; (2) Buhl’s motion to dismiss all claims other than defamation was granted in its entirety; and (3) Buhl’s motion to dismiss the defamation claim was granted in part and denied in part. The surviving aspects of the defamation claim against Buhl proceeded to discovery.