ORDER GRANTING MOTION TO DISMISS
Re: Dkt. No. 16
Plaintiffs Stephen Wynn and Wynn Resorts, Ltd. (collectively, “Wynn”) allege that defendant James Chanos falsely stated that Wynn violated the Foreign Corrupt Practices Act (“FCPA”) at a symposium at the University of California at Berkeley. That is not what Chanos said. I find that Chanos’s statements regarding Wynn and - the FCPA violations do not constitute slander per se and were protected opinions, not assertions of fact. In addition, the complaint does not adequately plead actual malice. Chanos moves to dismiss and also to strike under California’s anti-SLAPP statute, claiming that his speech is a matter of public interest and that Wynn’s defamation claim fails as a matter of law.
Stephen Wynn is the Chief Executive Officer and Chairman of the Board of Wynn Resorts, a publicly traded corporation that develops, owns and operates resorts in Las Vegas and Macau. Compl. ¶¶ 2-3 (Dkt. No. 1); Mot. Dismiss at 3 (Dkt. No. 16). Chanos is the owner and manager of a private investment management firm. 'Mot. Strike at 3 (Dkt. No. 11). He is well known for his “short selling” investment strategy, which he notably used to profit from trading Enron stock.
Chanos was invited to participate in an annual symposium for investigative reporting concerning the gambling industry, corruption, and organized crime in China. Mot. Strike at 7-8. This event featured a panel including Chanos, the former head of the Royal Hong Kong Police’s Criminal Intelligence Bureau, a New York Times reporter, and a convicted felon associated with organized crime in Macau. Tr. 1-3 (Dkt. No. 14-1, Ex. 1). The panel watched clips of and then discussed an upcoming television documentary that focuses on the gambling industry in Macau. Mot. Dismiss at 6. The event, which was held on April 25, 2014 at the U.C. Berkeley Graduate School of Journalism, was invitation only, and was attended by journalists, law enforcement, and government officials. Id.; Compl. ¶ 12.
After viewing a clip of the documentary, the moderator of the panel asked Chanos why he was “shorting Macau in China,” or placing short bets on the Macau gambling industry. Tr. 5. Chanos responded:
“... even I got a little nervous the deeper we dug into Macau and the more I got concerned that although I was long, the U.S. casino operators, like Mr. Adelson and Mr. Wynn, I began to really get concerned about the risk I was taking with clients’ money under Foreign Corrupt Practices Act and a variety of other, you know, aspects of exactly how business is done there. And, although, they hide behind the facade of the junket companies, increasingly, from a — if not across the legal line, to use my friend Bethany McLean’s term, it was “legal fraud.”
While they might be adhering to every aspect of legal requirements in what they were doing, there was still an attempt .to mislead and an attempt to obfuscate and I just couldn’t get comfortable with that.”
Tr. 6. Later on in the conversation, Cha-nos stated, “I mean, the fact of the matter is in the Foreign Corrupt Practices Act, almost any major company doing business in China knows something about the law; it’s a pretty broad law. Almost any company doing meaningful amounts of business in China probably could be found in violation of FCPA.” Id. at 41.
Wynn argues that these statements constitute slander per se, and that they charge Wynn with violating the FCPA. As evidence of the falsity of that position, it points to the fact that the U.S. Securities and Exchange Commission (“SEC”) and the Nevada Gaming Control Board (“NGCB”) exonerated Wynn of all alleged FCPA allegations. Oppo. Mot. Dismiss at 16 (Dkt. No. 31). According to Wynn, Chanos ignored this “readily available in
LEGAL STANDARD
I. MOTION TO DISMISS
A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6) shall be granted where the plaintiff fails “to state a claim upon which relief can be granted.” Fed. R. Crv. P. 12(b)(6). In reviewing these motions, courts view all of the pleaded facts as true and in the light most favorable to the plaintiff. Lee v. City of Los Angeles,
In order to survive a motion to dismiss their defamation claim, the plaintiffs “must not only establish that [the assertions] about which they complain are reasonably capable of sustaining a defamatory meaning, they must also show that they are not mere comment within the ambit of the First Amendment.” Knievel v. ESPN,
II. SLANDER PERSE
Slander per se “is a false and unprivileged publication, orally uttered ... which ... [cjharges any person with crime, or with having been indicted, convicted, or punished for crime.” Cal. Crv. Code § 46(1). A claim for slander per se requires a showing that the defendant made a factual assertion, as opposed to an opinion, that was false. Baker v. Los Angeles Herald Exam’r,
The question of whether a statement constitutes an actionable factual assertion is a question of law for the court to decide. Franklin v. Dynamic Details, Inc.,
The Ninth Circuit “distinguishes between two kinds of opinion statements: those based on assumed or expressly stated facts, and those based on implied, undisclosed facts.” Standing Comm. on Discipline of U.S. Dist. Court for Cent. Dist. of California v. Yagman,
California courts employ a “totality of the circumstances” test to determine whether an allegedly defamatory statement is actionable fact or nonactiona-ble opinion. Baker,
... First, the language of the statement is examined. For words to be defamatory, they must be understood in a defamatory sense. Where the language of the statement is cautiously phrased in terms of apparency, the statement is less likely to be reasonably understood as a statement of fact rather than opinion.
Next, the context in which the statement was made must be considered ... [and] the facts surrounding the publication must also be carefully considered.
This contextual analysis demands that the courts look at the nature and full content of the communication and to the knowledge and understanding of the audience to whom the publication was directed. [T]he publication in question must be considered in its entirety; [i]t may not be divided into segments and each portion treated as a separate unit. It must be read as a whole in order to understand its import and the effect which it was calculated to have on the reader, and construed in the light of the whole scope and apparent object of the writer, considering not only the actual language used, but the sense and meaning which may have been fairly presumed to have been conveyed to those-who read it.
Id. at 260-61,
If a plaintiff is a public figure, the First Amendment additionally requires that he or she show by clear and convincing evidence that the defendant acted with actual malice. Underwager,
Finally, the California Civil Code protects statements made “[i]n a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information.” Cal. Civ. Code § 47(c).
I. REQUESTS FOR JUDICIAL NOTICE
The parties have submitted multiple requests for judicial notice. I will only address the requests for judicial notice that I grant and upon which I rely in this Order, and DENY AS MOOT all other requests.
In resolving a Rule 12(b)(6) motion, a district court ordinarily may not look beyond the pleadings, and doing so will convert a motion to dismiss into a motion for summary judgment. Lee,
I take judicial notice of the video and corresponding transcript of the symposium during which Chanos made the allegedly defamatory remarks. This evidence, while not submitted as part of the Complaint, is integral to Wynn’s sole cause of action for slander per se. Wynn also does not contest the authenticity of either the transcript or the video. Instead, Wynn objects to these materials because they do not include the documentary clips that were viewed at the symposium, stri at 7. I have already ruled that the clips from the documentary are not relevant or necessary to resolve the claim for slander per se. Order at 1-2 (Dkt. No. 30). Although Wynn argues that the clips provide valuable context, see Oppo. Mot. Dismiss at 7, the contents of the clips do not change the fact that Wynn’s complaint fails as a matter of law on the grounds discussed below.
Next, SEC forms such as a Form 8-K or Form 10-K are matters of public record and may be subject to judicial notice. See, e.g., Oklahoma Firefighters Pension & Ret. Sys. v. IXIA, No. CV-13-08440 MMM SHX,
II. THE COMPLAINT FAILS TO ADEQUATELY PLEAD SLANDER PER SE UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6)
A. Wynn’s statements were not slanderous
The Complaint alleges that “Chanos stated that Wynn and Wynn Resorts had
As a preliminary question, I consider whether Chanos actually made a slanderous statement. In order to state a claim for defamation, the plaintiff must provide evidence (i) “of a statement of fact,” (ii) “that is provably false.” Seelig v. Infinity Broad. Corp.,
Chanos stated: “I got a little nervous the deeper we dug into Macau and the more I got concerned that .although I was long, the U.S. casino operators, like Mr. Adelson and Mr. Wynn, I began to really get concerned about the risk I was taking with clients’ money under Foreign Corrupt Practices Act and a variety of other, you know, aspects of exactly how business is done there.” Tr. 6. Although Wynn argues that “[n]o inference is needed to understand that evidence of FCPA violations triggered Chanos’ decision to change his investment strategy,” Oppo. Mot. Dismiss at 13, I find the opposite to be true. It takes a significant inferential leap to conclude that Chanos’s general uncertainty about the questionable business methods in Macau equates to an assertion that Wynn violated the FCPA.
In addition, Chanos’s statement is not defamatory for the simple reason that it cannot be false. As plaintiffs point out, a “critical question is whether there is a ‘core of objective evidence’ that can be brought to bear to prove or disprove the challenged statement.” Oppo. Mot. Dismiss at 14 (quoting Milkovich,
B. Wynn’s statements are opinions and not factual statements
Wynn’s complaint also fails because Chanos’s statements at the conference are non-actionable opinion. Once again, the key to this determination is whether a reasonable person could construe any of Chanos’s statements as a
Looking first to the statements at issue, Chanos expressed the position that he was very “concerned” after he “dug” deeper into “Macau,” where Wynn and others operate casinos. He did not specify the basis for this concern, potentially giving rise to an inference of undisclosed facts, including that the U.S. casino operators in Macau violated the FCPA. See Yagman,
In addition, Chanos’s comments appear to fall within the category of “loose” language protected by Milkovich, or words “cautiously phrased in terms of apparency” described in Baker. Milkovich,
Turning to the second Baker factor, the broad context and circumstances of the panel discussion support a decision that Chanos’s statements are opinions, and not factual assertions. First, Chanos is a financial investor. By profession, he makes calculations and speculates about the performance of various businesses. In response to the question of why he “short betted” in Macau, Chanos expressed his concern about risks from potential FCPA violations. Tr. 6. A reasonable listener would likely interpret Chanos’s discussions of FCPA violations as a highly educated guess dealing in probabilities, or as an explanation for his investment decisions. See, e.g., Biospherics, Inc. v. Forbes, Inc.,
In addition, the bases for Chanos’s opinions were not entirely undisclosed. Cha-nos discussed the “junket companies” that contributed to corporate deception in Chi
Chanos’s comments were also made in the context of an academic symposium. Wynn argues that this conference was “infused with academic rigor and ostensible journalistic integrity” and that “the audience expected that it would hear true facts from the panel’s experts.” Oppo. Mot. Dismiss at 12. But Wynn’s assessment must be juxtaposed with the fact that “circumstances in which an audience may anticipate efforts by the parties to persuade others to [sic] their positions by use of epithets, fiery rhetoric, or hyperbole” weigh in favor of finding an assertion to be opinion and not fact. Steam Press,
Moreover, Chanos later stated that “[a]lmost any company doing meaningful amounts of business in China probably could be found in violation of FCPA.” Tr. 41. This comment is clearly hyperbolic and cannot be considered to be defamatory. See Milkovich,
The third and final factor discussed by courts in making a determination of fact or opinion, whether Chanos’s statements are capable of being proved true or false, was discussed above and provides support for the fact that Chanos’s comments were opinion only. See Underwager,
For all these reasons, I find that no reasonable listener could conclude that Chanos’s comments amounted to an assertion that Wynn violated the-FCPA. Wynn failed to meet its burden that the statements are not opinion protected by the First Amendment. Knievel,
C. Chanos did not act with malice
The parties do not dispute that Wynn is a public figure and that Wynn must therefore prove Chanos acted with actual malice. See Oppo. Mot. Dismiss at 17. Because Chanos’s statements are not capable of being proved false, Chanos could not have acted with malice. Assuming, however, that Chanos made a factual assertion that Wynn violated the FCPA, Wynn must demonstrate that Chanos did so with knowledge of or serious subjective doubts as to its truth. See Alnor,
With respect to malice, the complaint alleges that “Chanos disregarded and pur
Wynn argues that it has established prima facie evidence of malice because Wynn publicly denied that it had committed FCPA violations, and because the SEC and other agencies found that Wynn did not commit any violations. Oppo. Mot. Dismiss at 16-18. But this evidence does not definitely prove that Chanos acted with malice, as the fact that the SEC ultimately did not find Wynn in violation of the FCPA does not mean that Wynn committed no FCPA violations whatsoever. In addition, courts have found that general allegations that a defendant should have known or should have investigated the truth of his or her statements do .not adequately plead actual malice. See Nicosia v. De Rooy,
Wynn does not provide any specif-' ic allegations that would support a finding that Chanos harbored serious subjective doubts as to the validity of his assertions. The complaint’s allegation that Chanos “published [the statements] with reckless disregard for the truth,” Compl. ¶ 21, is conclusory, as it merely recites an element of slander and does not present any potential supporting facts. This is insufficient to satisfy the “demanding burden” for pleading actual malice in defamation actions. Z.F. ex rel M.A.F. v. Ripon Unified Sch. Dist. (RUSD), No. 2:10-CV-00523,
First, both the SEC and the NGCB investigated Wynn for its activities in Ma-cau, which is itself cause to question Wynn’s compliance with the FCPA. Dkt. No. 33 4. These investigations apparently related to a donation by Wynn to the University of Macau. Id. Second, Wynn’s 2013 10-K provides explicit information about potential FCPA violations. It states that:
On February 18, 2012, the Board of Directors of Wynn Resorts received a report from Freeh, Sporkin & Sullivan, LLP detailing numerous instances of conduct constituting prima facie violations of the Foreign Corrupt Practices Act (the “FCPA”) by Kazuo Okada (formerly the largest beneficial owner of our shares) and certain of his affiliates ... The Company has provided the Freeh Report to applicable regulators and has been cooperating with related investigations of such regulators. The conduct of Mr. Okada and his affiliates and the outcome of any resulting regulatory findings could have adverse consequences to the Company. A finding by regulatory authorities that Mr. Okadaviolated the FCPA on Company property and/or otherwise involved the Company in criminal or civil violations could result in actions by regulatory authorities against the Company. Relatedly, regulators have and may pursue separate investigations into the Company’s compliance with applicable laws in connection with the Okada matter ... While the Company believes that it is in full compliance with all applicable laws, any such investigations could result in actions by regulators against the Company, which could negatively affect the Company’s financial condition or results .of operations.
Dkt. No. 14-1, Ex. 5 at'19 (emphases added). Third, the DOJ commenced a criminal investigation into the same events underlying the Okada affair, see Dkt. No. 14-2, Ex. 12, and Wynn does not dispute that its one-time largest beneficial shareholder faced serious criminal charges under the FCPA.
All of these government documents nullify Wynn’s allegations that Chanos disregarded publicly known information and that “Chanos had no reliable information whatsoever” on which to base his statements. Compl. ¶ 20. Actions taken by the SEC and the DOJ are reliable, readily available, and of interest to reasonable investors in the industry. In the face of such evidence, it is not possible to establish malice on the basis that a defendant ignored publicly known information. Wynn failed to adequately plead actual malice under Rule 12(b)(6).
Wynn continues to assert that additional discovery would allow it to uncover evidence of actual malice. Oppo. Mot. Dismiss at 18. However, there is no reasonable expectation that discovery .will prove any evidence that demonstrates subjective malice on Chanos’s behalf. As Wynn itself contends, it must provide “.enough fact[s] to raise a reasonable expectation that discovery will reveal evidence to prove [its] claim.” Oppo. Mot. Dismiss at 15 (internal quotations and citations omitted). This was not done here, as Wynn’s complaint relies solely on Chanos’s presumed knowledge of “readily available information.” Compl. ¶ 19. Because the complaint does not sufficiently allege defamation or malice, Chanos’s motion to dismiss is GRANTED.
CONCLUSION
For the above reasons, I GRANT Cha-nos’s Motion to Dismiss. Because of the liberal standard for granting leave to amend, the dismissal is without prejudice. See, e.g., Verizon Del., Inc.,
IT. IS SO ORDERED.
Notes
. Because I dismiss the Complaint with leave to amend, I do not address the merits of Chanos's Motion to Strike at this point and DENY it without prejudice. See Verizon Delaware, Inc. v. Covad Commc’ns Co.,
. A "short bet” involves "[a] sale of a security that the seller does not own or has not contracted for at the time of sale, and that the seller must borrow to make delivery.” SALE, Black’s Law Dictionary (9th ed. 2009), available at Westlaw BLACKS. A seller usually makes a short bet when he or she “expects the security’s price to drop. If the price does drop, the seller can make a profit on the difference between the price of the shares sold and the lower price of the shares bought to pay back the borrowed shares.” Id.
. I do not address the extensive requests for judicial notice of news articles and press releases, because the publicly filed documents above provide sufficient information to resolve the question of slander per se.
. Although I need not address the applicability of privilege under California law, Chanos’s assertions are likely protected under California Civil Code § 47(c). There is insufficient evidence of malice, and it appears that all three subsections of Section 47(c) apply in this case. See Cal. Civ. Code § 47(c).