ADDITIONAL CASES Teri Buhl, Counter-Claimant v. Harvey J. Kesner, Counter-Defendant OPINION & ORDER This case involves libel claims arising out of blog posts about plaintiff Harvey J. Kesner (“Kesner”) by defendant Teri Buhl (“Buhl”). Kesner is an attorney who represented 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”). Kesner’s role in his clients’ misdeeds was the subject of various unflattering media reports. These led Kesner to bring this libel suit against Buhl, a frequent blogger and investigative journalist focused on financial reporting, Dow Jones & Company, Inc. (“Dow Jones”), and William Alpert (“Alpert”). Kesner’s claims against the latter two were based on an October 2018 article Alpert wrote for the Dow Jones magazine Barron’s. The Court previously dismissed in its entirety Kesner’s libel claims against Dow Jones and Alpert, and in principal part Kesner’s libel claims against Buhl, for failure to state a claim. See Kesner v. Dow Jones & Co., Inc., 515 F. Supp. 3d 149, 158 (S.D.N.Y. 2021), appeal dismissed (2d Cir. Apr. 16, 2021). The Court left standing Kesner’s claims only to the extent that Buhl, in three of her many blogs and tweets on the subject, had accused Kesner of criminal activity. Before the Court now is Buhl’s motion for summary judgment as to the three surviving claims against her. Also before the Court is Kesner’s motion to dismiss a counterclaim that Buhl brought during discovery, asserting a violation of New York Civil Rights Law §70-a. For the reasons that follow, the Court grants both Buhl’s summary judgment motion and Kesner’s motion to dismiss. I. Background A. Factual Background1 1. Parties Kesner is an attorney and a member of the New York Bar. Dkt. 36 (“Am. Compl.”) 37; Pl. 56.1 1. His legal practice focused on securities law and other financial matters. Def. 56.1 2; Pl. 56.1 2. In 2018, Kesner left the law firm Sichenzia Ross Ference Kesner LLP (“SRFK”). Def. 56.1 3; Pl. 56.1 3. Buhl is a blogger who styles herself an investigative journalist. Her reporting focuses on the financial and securities industry. Buhl Aff.
1-7. Buhl is the owner of and sole reporter on the news site: “Teri Buhl Smashmouth Investigative Journalism,” which today is available at www.teribuhl.com. Id. 7; Pl. 56.1 5. At all relevant times, Buhl was the sole user of the Twitter handle @buhlreports. Buhl Aff. 8; Pl. 56.1 6. Buhl also works as a contributing reporter for Cannabis Law Report, a publication based in Australia and owned by Sean Hocking. Buhl Aff. 3; Pl. 56.1 7. 2. Buhl’s 2016-2018 Reporting on Kesner On or around May 26, 2016, Buhl published on her website an article in which Kesner was mentioned for the first time. Buhl Aff. 9. The article was titled Microcap Attorney Jaclin’s Co-Conspirator Turned DOJ Witness in Shell Factor Scheme (“May 2016 Article”). Id. The May 2016 Article mentions Kesner as the attorney for Barry Honig (“Honig”), who, the Article speculates, had been involved in a scheme by an attorney named Jaclin. Id. 10; id., Ex. A. Kesner was quoted in the article opining on whether Jaclin had improperly signed opinion letters in 2011 and 2012. Id. 10. Consistent with her growing number of blogs about these subjects beginning in mid-2016, Buhl states that, over time, she learned more about Honig and his investor group, which, she asserted, engaged in questionable stock transactions, specifically, alleged “pump-and-dump” schemes relating to the stock of publicly traded companies. Id. 12. She increasingly reported about this group, which included Honig’s attorney, Kesner, and which she called “Team Honig” in her reporting. Id. On November 8, 2016, Buhl published an article titled California DOJ investigating Honig and The Frost Group (“November 2016 Article”).2 Id. 13. The November 2016 Article reported that the DOJ was “sniffing around” the investing and trading activities of Honig and Philip Frost. Id., Ex. B. Specifically, Buhl reported, the DOJ was investigating whether trading activity in the company Biozone Pharmaceuticals, Inc. (“Biozone”) was part of an illegal pump-and-dump scheme. Id. The November 2016 Article included the following passage about Kesner: Rumors have been swirling around the microcap space for a while now that attorney Kesner’s work with Honig could place him in the hot seat with the SEC but the Biozone investor is the first person I’ve interviewed who said the SEC probed him about Kesner’s role with Honig. Kesner has not been publicly named in any SEC enforcement actions. Kesner was fired from big law Haynes and Boone, where he worked before joining SRFF [sic]. Id. The November 2016 Article was the subject of a separate defamation suit brought by Kesner against Buhl that was eventually dismissed with prejudice. Id. 13. Buhl explains that at some point, she became aware of a statement made by Daniel Fisher (“Fisher”) challenging an aspect of her November 2016 Article. Id. 14.3 In a sworn statement, Fisher surmised that he was the anonymous “Biozone investor” referenced in the article. Fisher denied telling Buhl that the SEC was investigating Kesner or that Fisher had been interviewed by the SEC about Kesner. Buhl Aff., Ex C. Fisher stated that he told Buhl only that Kesner was the deal lawyer for a transaction he reported to the SEC, and which had resulted in a private lawsuit brought by Fisher. Id. 3. The SEC Action On September 7, 2018, the SEC filed a civil complaint against Honig and certain alleged associates, in this District, alleging numerous violations of securities laws related to three public companies (the “SEC Action”). Buhl Aff. 16; id., Ex. D; Pl. 56.1 11. These three companies are Biozone (to which the SEC’s complaint referred as “Company A”); MabVax Therapeutics (“Company B”) (“MabVax”); and MGT Capital (“Company C”) (“MGT Capital”). Paul Decl. 8; id., Ex. D; Pl. 56.1 12. Kesner was not named or referenced in the SEC’s original complaint. Buhl states that, as of this point, her earlier reporting had confirmed the following with respect to Kesner: Since at least 2007, Kesner had represented Honig, and as a condition of future financing by Honig, had been appointed counsel of the microcap companies; Kesner’s representation of companies in which Honig or his business associates invested generally included advice as to securities law; Once Honig made an investment into a public company, Kesner was often named as securities counsel for the public company; For both Biozone and MabVax, Kesner was counsel to these public companies before the SEC Complaint was filed. Buhl also had established that Kesner was counsel for MuscelPharm when it merged with Biozone/CoCrystal. Through a confidential source, Buhl learned that Kesner’s involvement with “Team Honig” was also being investigated by the SEC.4 Buhl Aff. 16(a)-(e). On March 8, 2019, the SEC filed its First Amended Complaint. Buhl Aff. 17; id., Ex. E (“SEC FAC”); Pl. 56.1 13. The SEC FAC made allegations concerning “Issuer’s Counsel,” and “Issuer’s Counsel Partner.” Pl. 56.1 14; Id., Ex. E; Buhl Aff. 17. Issuer’s Counsel was the law firm SRFK. Pl. 56.1 14. Issuer’s Counsel Partner was Kesner. Id.; Buhl Aff. 17. The SEC FAC included the following allegations, which Buhl understood to refer to Kesner and SRFK: After a reverse merger of Biozone, resulting in Honig’s and his associates’ controlling Biozone’s outstanding shares and of the company, Biozone disclosed that it had retained new corporate counsel (“Issuer’s Counsel”) — the same firm and same partner at that firm (“Issuer’s Counsel Partner”) whom Honig had insisted other issuers in which he was invested retain. SEC FAC 90. During 2015 and 2016, “Honig and his associates used [MabVax], once a publicly traded shell, as another vehicle for their pump-and-dump schemes…. As with [Biozone], [Mabvax] engaged Issuer’s Counsel as company counsel.” Id. 125. In or about April 2014, Honig called the CEO of MGT Capital and announced “I’m the owner of your company. You better do what I tell you to do.” Honig demanded certain actions and changes, including the engagement of “Issuer’s Counsel.” Id. 162. Thereafter, Honig and his associate made it a condition of Series D financing that MGT Capital “retain Issuer’s Counsel and Issuer’s Counsel Partner after the closing — the law firm and partner that they had required [Biozone] to retain, and the same law firm retained by [MabVax]. Not only did Honig and [his associate] insist that Issuer’s Counsel represent [MGT Capital], in a March 12, 2015 email to [MGT Capital]‘s CFO, [Honig's associate] also demanded that [MGT Capital] set aside a year of prepaid legal fees as an additional condition to doing the deal.” Id. 172. Kesner allegedly helped conceal Honig’s name from his investment in MGT Capital: “Issuer’s Counsel also understood the importance of keeping Honig’s and Brauser’s investment through Southern Biotech undisclosed. Right before the closing of the Series D financing, different counsel involved in the transaction sent proposed Form 8-K language to Issuer’s Counsel (which was not yet counsel to [MGT Capital] and was acting as placement agent’s counsel) in which [MGT Capital]‘s then-counsel named Southern Biotech as an investor in a footnote. Immediately, on March 25, 2015, Issuer’s Counsel Partner and another lawyer from Issuer’s Counsel wrote back that ‘[n]o stockholder [investor] should be named.’ Further, at [Honig's associate's] and Honig’s direction, Issuer’s Counsel changed the beneficial ownership blocker requirement to 2.49 percent to create an artificial and deceptive ‘cap’ on the amount of common stock that could be held at one time. [Honig's associate] explained in a March 24, 2015 email to [MGT Capital]‘s CFO that the requirement was ‘due to [Honig] being the beneficial owner of both GRQ[]and Southern Bio[tech].’ While that 2.49 percent cap prevented GRQ and Southern Biotech from collectively owning more than 5 percent, it did nothing to prevent their aggregate group ownership with other associates from exceeding 5 percent — the reporting threshold — even if their individual common stock ownership was kept to 2.49 percent or below.” Id. 179. When negotiating the final terms of the Series E financing for MGT Capital, “[Honig's associate] sought reassurance from Issuer’s Counsel Partner in an April 3, 2015 email, asking: ‘Are you comfortable that we will get control of the board with this language?’ After the financings closed, Honig attempted to further exert his control over [MGT Capital]. For example, Honig spoke with [MGT Capital]‘s CEO about changing the composition of the company’s Board and suggested a specific individual as a candidate. After [MGT Capital]‘s CEO interviewed the candidate, Issuer’s Counsel Partner sent the candidate a letter containing the signature line of [MGT Capital]‘s CEO inviting him to join the Board on April 1, 2015. When [MGT Capital]‘s CEO learned of the offer, he contacted Issuer’s Counsel Partner in an April 14, 2015 email and instructed him to rescind the offer because it had not been authorized by the Board. Issuer’s Counsel Partner agreed to do so, explaining to [MGT Capital]‘s CEO that he had been following Honig’s directions in sending the offer letter on behalf of [MGT Capital]‘s CEO.” Id.
