ROBERT D. PRESS v. PATRICK J. PRIMAVERA
Case No. 1:21-cv-10971 (JLR)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
August 3, 2023
JENNIFER L. ROCHON, United States District Judge
OPINION AND ORDER
Plаintiff Robert D. Press (“Plaintiff“) brings this diversity action against Defendant Patrick J. Primavera (“Defendant“) alleging defamation for statements made to the U.S. Securities and Exchange Commission (“SEC“). See ECF No. 1 (“Compl.“). Now before the Court is Defendant‘s motion to dismiss the Complaint on the grounds that his statements made to the SEC are absolutely privileged because they were made in the course of a quasi-judicial proceeding. See ECF No. 28 (“Br.“); ECF No. 35 (“Reply“). Plaintiff opposes the motion. See ECF No. 33 (“Opp.“). For the reasons set forth below, the Court DENIES Defendant‘s motion to dismiss.
BACKGROUND1
Defendant Primavera is a former Managing Director of the New York office of TCA Fund Management Group Corp. (the “TCA Group” or “TCA Investment Manager“), аn investment firm founded by Plaintiff. Compl. ¶ 1. Defendant was hired by Plaintiff in approximately July 2016 as “Managing Director of TCA Investment Manager‘s New York office,” and began in his role in September 2016. Id. ¶ 19. In that role, he oversaw employees
In January 2020, Plaintiff learned that a whistleblower complaint was filed with the SEC about his company. Id. ¶ 28. Plaintiff does not allege that Defendant filed that complaint. At Plaintiff‘s request, lawyers for the TCA Group initiated an internal investigation to look into the allegations in the whistleblower complaint, an investigation Plaintiff characterizes as being conducted “side-by-side” with the SEC investigation. Id. Plaintiff alleges that the internal investigation revealed that Defendant had engaged in a “fraudulent pattern of activity” in which,
On December 22, 2020, Defendant submitted a declaration (the “statement” or “Declaration“) to the SEC that allegedly falsely blamed Plaintiff for Defendant‘s aforementioned misconduct. Id. ¶ 57. Although Plaintiff does not attach the Declaration to his Complaint, he alleges that it contains defamatory statements, including statements that the TCA Group did not have an investment banking department, no one on staff could provide the services outlined in the IBSAs, and that Plaintiff was aware of all of it. Id. ¶ 57. Plaintiff contends that thеse statements were false because Plaintiff relied in good faith on Defendant to hire staff and run the investment banking side of the business. Id. ¶¶ 58-60. Plaintiff further alleges that, in the Declaration, Defendant “falsely claimed . . . that [Plaintiff] was aware of the financial condition of the companies that signed IBSAs and knew most of the investment banking fees recorded were uncollectible.” Id. ¶ 61. Plaintiff says that Defendant lied and hid information in order to
Plaintiff alleges he was damaged by the Declaration submitted to the SEC. He contends that, nоt only did it harm his reputation in his trade and expose Plaintiff to public ridicule, but as a result of Defendant‘s statements, Plaintiff “was compelled to reach a settlement with the SEC, without admitting or denying any of the substantive allegations, in order to put this matter behind him.” Id. ¶ 63; see id. ¶ 69. The Complaint does not indicate on what date, or in what context, this settlement was reached.
On December 21, 2021, Plaintiff filed the instant defamation action. See generally Compl. Defendant filed a motion to dismiss on September 6, 2022. ECF No. 27. On September 22, 2022, the case was reassigned to the undersigned. ECF No. 31. On September 30, 2022, Plaintiff filed his opposition to the motion to dismiss. See generally Opp. On October 7, 2022, Defendant filed his reply brief. See generally Reply.
LEGAL STANDARD
To survive a motion to dismiss under
DISCUSSION
I. Judicial Notice
As an initial matter, the parties dispute the information the Court may consider in evaluating the motion to dismiss. Defendant argues that the Court should take judicial notice of two documents: (1) a complaint for injunctive and other relief, filed in the Southern District of Florida by the SEC against TCA Group, TCA Global Credit Fund GP, LTD., and related entities,
Pursuant to
Both documents at issue here satisfy the standard for judicial notice. The Injunction Complaint was filed on the public docket in the Southern District of Florida on May 11, 2020. See Compl., SEC v. TCA Fund Mgmt. Grp. Corp. et al., 20-cv-21964 (CMA) (S.D. Fl. May 11, 2020), ECF No. 1. While the Injunction Complaint, by its nature, contains only allegations, the date and fact of its filing “can be accurately and readily determined from sources whose accuracy cannot reаsonably be questioned.”
The SEC Order was also publicly available as of September 30, 2021, as part of the SEC‘s administrative proceedings, and is available in the SEC‘s online аrchives. See Robert D. Press, Release No. 33-10991, File No. 3-20610, (SEC Sept. 30, 2021) (available at https://www.sec.gov/litigation/admin.htm). Again, the date and fact of its filing “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”
The next initial matter that the Court must address is the state law applicable to this diversity action. Defendant asserts that Florida or New Jersey law should apply, and Plaintiff contends that New York law should apply.
“In diversity cases, federal courts apply the choice of law rules of the forum state[.]” Gilbert v. Seton Hall Univ., 332 F.3d 105, 109 (2d Cir. 2003); see also Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). The Court therefore applies the choice of law rules of New York. Under that regime, the Court must first determine whether there is a conflict between the defamation laws of New York, Florida, and New Jersey, and in particular, the standard for absolute privilege, which is at issue here. See Kesner, 515 F. Supp. 3d at 167; see also Matter of Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219, 223 (1993) (“The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved.“). The parties do not address whether there is a conflict between the litigation privilege laws in New York, Florida, or New Jersey; in fact, they do not even acknowledge this preliminary step, but instead simрly argue for the law of different states to apply. Nevertheless, upon a careful review of the case law in these states, the Court discerns important differences: these states do not all appear to evaluate, in the same way, the question of absolute privilege to allegedly defamatory statements made in the preliminary or investigative stage of a judicial or quasi-judicial proceeding, which could be relevant here given the timing of the December 2020 Declaration prior to the SEC Order. See supra Section III.
Both New York and New Jersey law recognize an absolute privilege with respect to communications that are preliminary and related to а judicial or quasi-judicial proceeding. See Rosenberg v. MetLife, Inc., 8 N.Y.3d 359, 367-68 (2007) (concluding that “compulsory” form
The law in Florida is more unsettled, with courts scrutinizing the type of communication, the context in which it was made, and policy considerations in determining whether a qualified or absolute privilege applies to statements that are preliminary to a judicial or quasi-judicial proceeding. See, e.g., Fridovich v. Fridovich, 598 So. 2d 65, 68 (Fla. 1992) (concluding that qualified, not absolute, privilege applies to “preliminary investigations” prior to a criminal judicial proceeding); DelMonico v. Traynor, 116 So. 3d 1205, 1218 (Fla. 2013) (concluding that qualified, not absolute, privilege applies to an examination under oath that occurred outside the formal discovery process of litigation); BOCA Invs. Grp. v. Potash, 835 So.2d 273, 276 (Fla. 3d Dist. 2002) (Cope, J. concurring) (stating “the question of what privilege applies to pre-suit communications will evolve under case law, depending on the type of communication and the policy considerations involved“); Wilmington Trust v. Gonzalez, 15-cv-23370 (UU), 2015 WL 13847162, at *6 (S.D. Fla. Dec. 22, 2015) (observing that “without any clear directive from the Florida Supreme Court,” “[a]pplication of the privilege remains unsettled in circumstances
Because there is a conflict, the Court must turn to New York‘s choice of law rules to determine which state‘s law should govern this action. “In tort cases, New York applies the law of the state with the most significant interest in the litigation,” considering whether a rule is “conduct-regulating” or “loss-allocating.” Kinsey v. N.Y. Times Co., 991 F.3d 171, 176 (2d Cir. 2021) (internal citations and quotation marks omitted). Because “[d]iscouraging defamation is a conduct regulating rule,” the law of the situs of the tort usually applies. Lee v. Bankers Tr. Co., 166 F.3d 540, 545 (2d Cir. 1999). This presumption exists because New York choice of law principles for conduct-regulating rules look to the “jurisdiction [that] has the greatest interest in regulating behavior within its borders” – which is “usually the state where the tort occurred.” Kesner, 515 F. Supp. 3d at 168 (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993)). In defamation cases, the tort generally occurs where the harm occurs: in the state where the plaintiff is domiciled. See Adelson v. Harris, 973 F. Supp. 2d 467, 476 (S.D.N.Y. 2013) (“Because ‘the locus of the tort is where the plaintiff suffered injury, often the Court can resolve the choice of law analysis [in a defamation action] simply by observing the state of plaintiff‘s domicile and presuming that the publication injured him in that state.‘” (quoting Condit v. Dunne, 317 F. Supp. 2d 344, 353 (S.D.N.Y. 2004))).
New York choice of law rules require the application of Florida law to this action. As noted, the presumptive choice of law for a defamation case is the domicile of the plaintiff, the place where the injury occurred. See Adelson, 973 F. Supp. 2d at 476. Plaintiff is domiciled in Florida. Florida has “a strong policy interest in having its defamation laws applied to protect [P]laintiff, its resident, from the allegedly defamatory statements of outsiders.” Catalanello, 18 F. Supp. 3d at 512 (internal citation and quotation marks omitted). Therefore, Florida law presumptively applies here.
Plaintiff asks the Court to nevertheless apply the law of New York because Defendant‘s “wrongful conduct” took place there, Defendant was employed by Plaintiff in New York, and Plaintiff‘s reputation was injured there. See Opp. at 7-9. In support, Defendant relies primarily on Kesner. Id. In Kesner, even though the plaintiff was domiciled in Florida and sought the
Because there are no allegations that the Declaration was published nationally, there is no basis to disregard the presumрtion to apply the law of Plaintiff‘s domicile – Florida law. Plaintiff has not pointed to any case law that supports disregarding the presumption that the law of the plaintiff‘s domicile applies in a defamation claim where the statement is not published nationally. Other facts also support Florida‘s significant interest in this case. Plaintiff worked
III. Analysis
Under Florida law, “[t]o state a claim for common law defamation, a plaintiff must allege that ‘(1) the defendant published a false statement (2) about the plaintiff (3) to a third party and (4) that the falsity of the statement caused injury to the plaintiff.‘” Turner v. Wells, 198 F. Supp. 3d 1355, 1364 (S.D. Fla. 2016) (quoting Alan v. Wells Fargo Bank, N.A., 604 F. App‘x. 863, 865 (11th Cir. 2015)). Defendant does not dispute that Plaintiff has alleged these elements. See generally Br. Instead, Defendant argues that any allegedly defamatory statements are absolutely privileged because they were made during the cоurse of a quasi-judicial proceeding. See id. at 8-9. Plaintiff disagrees that the statements are absolutely privileged, but asserts that such a determination should not be made on a motion to dismiss. Opp. at 9-19. Importantly, “Florida courts have also made it abundantly clear that any affirmative defense, including the litigation
Under Florida law, absolute privilege shields statements from being subject to defamation lawsuits that are “made either in front of a judicial officer or in pleadings or documents filed with the cоurt or quasi-judicial body.” DelMonico, 116 So. 3d at 1217; see also Gursky Ragan, P.A. v. Ass‘n of Poinciana Vills., Inc., 314 So. 3d 594, 595 (Fla. Dist. Ct. App. 2020) (“In other words, defamatory statements are absolutely privileged when they are (1) published in the course of judicial proceedings and (2) bear some relation to or connection with the subject of inquiry.” (emphasis added)). Florida courts apply this privilege to statements made during judicial proceedings because, “[i]n these more formalized judicial settings, the presence of safeguards facilitates and promotes an unimpeded speaking environment while protecting an individual from false or malicious statements[.]” DelMonico, 116 So. 3d at 1217. For example, the privilege applies to affidavits filed in court, see Zuccarelli v. Barfield, 165 So. 3d 830, 832 (Fla. Dist. Ct. App. 2015), and statements made during a deposition, McCullough v. Kubiak, 158 So. 3d 739, 740 (Fla. Dist. Ct. App. 2015). Importantly, in quasi-judicial proceedings, the privilege will also apply to statemеnts so long as there are “protection[s] against abuse” in the process, such as where the proceeding is “adversarial in nature and the opposing side has an opportunity to immediately object to any untrue statements.” DelMonico, 116 So. 3d at 1217. Again, these safeguards protect the subject of the allegedly defamatory statement, while also permitting the absolute privilege to work “as a mechanism for discovering truth . . . .” Id. at 1218.
Plaintiff argues that an absolute privilege does not protect Defendant‘s statement here because the Declaration was not made during a judicial or quasi-judicial proceeding in which safeguards were present, and even if a qualified privilege applies, the Declaration was made with malice. See Opp. at 12-14. In terms of the proceedings at issue here, on May 11, 2020, the SEC initiated an action in federal court, an undisputable judicial proceeding, with respect to the TCA Group. See Injunction Complaint.
Moreover, the administrative proceeding commenced by the SEC against Plaintiff, as described in the SEC Order filed on September 30, 2021, is a quasi-judicial proceeding. “The SEC has statutory authority to enforce the nation‘s securities laws . . . [including] by instituting
Statements made in the course of a quasi-judicial SEC administrative proceeding would therefore be absolutely privileged under Florida law, which comports with findings in other analogous administrative contexts. For instance, in Gandy v. Trans World Computer Technology Group, the court held that affidavits filed in response to an EEOC investigation were absolutely
Here, the Court is unable to determine from the allegations in the Complaint and the judicially-noticed facts whether or not the allegedly defamatory Declaration was made in the course of, or prior to, a judicial proceeding, like that contemplated by the Injunction Complaint, or a quasi-judicial proceeding, like that contemplated by the SEC Order. The Declaration here was made on December 22, 2020, between the filing of the Injunction Complaint and thе SEC Order. Compl. ¶ 57. It is not clear from the facts alleged whether the Declaration was made in the course of either of those proceedings. To be sure, the facts alleged suggest that the statement was likely made in connection with some sort of investigation related to one or both of those proceedings. For instance, Plaintiff alleges that he initiated an internal investigation in January 2020, after he learned that a whistleblower complaint had been filed with the SEC. Id. ¶ 28. He further alleges that this investigation would be “side-by-side” with the SEC‘s investigation into the whistleblower complaints. Id. Thus, the Complaint makes clear that the SEC had initiated an investigation into TCA Group as early as January 2020. Then, in May 2020, as thе Injunction Complaint demonstrates, the SEC filed an action in federal court against the TCA Group. See Injunction Complaint.
Over one year later, on September 30, 2021, the SEC issued an Order Instituting Administrative and Cease-and-Desist Proceedings before the SEC captioned In the Matter of Robert D. Press. See SEC Order. The SEC Order instituted an agreed-up resolution to the
As previously described, Florida law appears to differentiate between statements made prior to, versus during the course of, a proceeding. At the very least, that area of law is unsettled enough in Florida that more facts are necessary to fully evaluate whether an absolute or qualified privilege would apply here. Thus, the Court cannot conclude which privilege applies to the Declaration аt this early stage of the litigation. See Uganda v. Est. of Tonder, No. 2:21-cv-00916 (JES) (NPM), 2022 WL 3369496, at *3 (M.D. Fla. Aug. 16, 2022) (denying motion to dismiss on privilege grounds where it was unclear if the statement was “made in judicial proceedings or necessarily connected to the litigation“); Daytree at Cortland Square, Inc. v. Walsh, 332 F. Supp. 3d 610, 633 (E.D.N.Y. 2018) (denying motion to dismiss on absolute privilege grounds because of “ambiguity regarding the timing and scope of the [statement]” made to an insurance company). The parties will need to develop a factual record clarifying when the Declaration was made, under what circumstances it was made, when proceedings were instituted and what they entailed, and any other information that may be relevant to whether a qualified or absolute privilege may apрly. See Bel Canto Design, Ltd. v. MSS HiFi, Inc., No. 11-cv-06353 (CM), 2012 WL 2376466, at *14 (S.D.N.Y. June 20, 2012) (“To prove that its statements to eBay and
CONCLUSION
For the reasons stated herein, Defendant‘s motion to dismiss is DENIED. IT IS HEREBY ORDERED that Defendant shall file its answer to Plaintiff‘s claim no later than 21 days after the date of this Opinion and Order. IT IS FURTHER ORDERED that, within 14 days of service of the Answer, the parties shall file a proposed Civil Case Management Plan and Scheduling Order, which is available at https://www.nysd.uscourts.gov/hon-jennifer-l-rochon.
Dated: August 3, 2023
New York, New York
SO ORDERED.
JENNIFER L. ROCHON
United States District Judge