Case Document 48 Filed 01/15/19 Page 1 of 12

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

MIKHAIL FRIDMAN, PETR AVEN,
and GERMAN KHAN

Plaintiffs,
v.

Civil Case NO. 17-2041 (RJL)

BEAN LLC (a/k/a FUSION GPS) and
GLENN SIMPSON



Defendants.

MEMORANDUM OPINION
(January 11, 2019) [Dkt. 19, 20]

This is a defamation action for monetary damages brought by three Russian
businessmen?Mikhail Fridman, Petr Aven, and German Khan (?plaintiffs?)?against
political opposition research ?rm Fusion GPS and its principal Glenn Simpson
(?defendants?). Pending before me are defendants? motions to dismiss under the DC.
Anti?Strategic Lawsuits Against Public Participation Act of 2010, DC.
Code 16??5501?5505, and Federal Rule of Civil Procedure [Dkt. 19, 20].
On September 26, 2018, the parties presented oral argument on these motions, and on
November 7, 2018, the parties submitted supplemental brie?ng. [Dkt 43, 44]. Upon
consideration of the pleadings and the relevant law, and for the reasons set forth below,

defendants? motions to dismiss are DENIED.

Case Document 48 Filed 01/15/19 Page 2 of 12

BACKGROUND

Plaintiffs claim that defendants falsely accused them and their business consortium,
Alfa, of engaging in criminal and other misconduct in conjunction with the Russian
government and its president, Vladimir Putin. See generally Am. Compl. [Dkt 17].
Plaintiffs allege that defendants are liable for defamatory statements contained in one of
the seventeen written Company Intelligence Reports 2016 that collectively
comprise what is now known publicly as the ?Trump Dossier? or simply the ?Dossier.? Id.
at 1?2. According to the Amended Complaint, defendants were hired first by the
Washington Free Beacon and later by a law firm representing the Democratic National
Committee and the Hillary Clinton presidential campaign to conduct political opposition
research against then-candidate Donald Trump. 1d. at fl 15. To perform this research,
defendants engaged former British intelligence officer turned private investigator
Christopher Steele and his company Orbis Business Intelligence Limited. 1d. at 11 3. Steele
allegedly used his sources in Russia to create the CIRs and compile the Dossier. 1d.

At issue in this case is CIR 112. CIR 112 is titled PRESIDENTIAL
ELECTION: KREMLIN-ALPHA GROUP which, according to
plaintiffs, implies that they, through Alfa, ?cooperated in the alleged Kremlin-orchestrated
campaign to interfere in the 2016 US. presidential election.? Id. at 11 19 (alleging that
nearly all of the CIRs bear headings related to alleged Russian interference in the 2016
United States presidential election and/or ties between the Russian government and the
2016 campaign of now?President Donald Trump). CIR 112, which defendants attached to

their motion to dismiss, describes plaintiffs? and Alfa?s purported relationship with Putin,

2

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including (1) ?[s]ignif1cant? political favors done by plaintiffs for Putin in exchange for
business and legal favors done by Putin for Alfa; (2)'an ?illicit cash? delivery by an ?Alpha
executive? to Putin while Putin was the Deputy Mayor of St. Petersburg; (3) ?informal
advice? given by two of plaintiffs to Putin regarding Russian foreign policy toward the
United States; and (4) compromising information held by Alfa about Putin as a source of
leverage. See [Dkt. 20-2]. Plaintiffs claim that the foregoing statements are false and
defamatory because they accuse plaintiffs and their'business of ?maintain[ing] a highly
inappropriate, and even criminal, relationship with Putin? and, by implication, involvement
in the Russian government?s campaign to interfere with the 2016 United States presidential
election. Am. Compl. 23.

The Amended Complaint asserts that defendants knew that the CIRs contained
?unveri?ed? and potentially inaccurate information gathered from sources and
?subsources? unknown to them. Id. at 3?4, 13, 16, 18. In 2016, defendants allegedly
arranged for Steele to brief select members of the media about the contents of the then-
incomplete Dossier, including CIR 112, to ?generate interest in the Dossier and secure
eventual public dissemination of its content.? Id. at 6, 18. These briefings were
followed soon after by media articles describing the Dossier?s contents. Id. In addition,
defendants allegedly published the Dossier and CIR 112 to multiple other third parties. Id.
at?l 18. Ultimately, on January 10, 2017, media organization BuzzFeed, Inc. published the

entire Dossier online, including CIR 112. Id. at 11 8.

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ANALYSIS
1. DC. Act

The DC. Act imposes a heightened pleading standard where a
defendant makes ?a prima facie showing that the claim at issue arises from an act in
furtherance ofthe right of advocacy on issues ofpublic interest.? DC. Code 
Upon such a showing, a plaintiff can survive dismissal only by ?demonstrat[ing] that the
claim is likely to succeed on the merits.? 1d. Defendants contend that they have made the
required threshold showing, that plaintiffs cannot show a likelihood of success, and that,
therefore, law forecloses plaintiffs? defamation action. See Mem. in
Supp. of Defs.? Special Mot. to Dismiss Under the DC. Act [Dkt 19-1].
1 disagree. How so?

As a general matter, federal courts sitting in diversity, as I am here, are called on to
apply local substantive law and federal procedural rules. Hanna v. Plumer, 380 US. 460,
465 (1965) (citing Erie RR. Co. v. Tompkins, 304 US. 64 (1938)). Where local substantive
law and a validly promulgated federal rule address the same question but differ as to the
answer, the federal rule controls. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins.
Co, 559 US. 393, 398?99 (2010). Applying this framework, then-Judge Kavanaugh wrote
for our Circuit in Abbas v. Foreign Policy Group, LLC, 783 F.3d 1328 (DC. Cir. 2015)
that a federal court sitting in diversity must apply Federal Rules ofCivil Procedure 12 and
56 rather than law, as the former are valid and ?answer the same

question? differently than the latter. Id. at 1334?37.

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Defendants respond that the DC. Court of Appeals later rejected Abbas in
Competitive Enterprise Institute v. Mann, 150 A.3d 1213 (DC. 2016). See Novak v.
Capital Dev. Corp. 452 F.3d 902, 907 (DC. Cir. 2006) (federal court?s ?duty"
in resolving question of DC. substantive law ?is to achieve the same outcome" that the
DC. Court of Appeals would reach). Were that true, Mann would control here so long as
it ?clearly and unmistakably? resolves the disputed question. See Easaw v. Newport, 253
F.Supp.3d 22, 35 (D.D.C. 2017). Unfortunately for defendants, however, three of my
colleagues on this Court recently have held that Mann does not sufficiently resolve this
issue and that, therefore, Abbas remains the controlling law in our Circuit. See Cockrum
12. Donald J. Trump for President, Inc, 319 F.Supp.3d 158, 165 n.2 (D.D.C. 2018)
(Huvelle, J.) (?The Court continues to adhere to its view that controlling precedent
precludes the application of Act in federal court?); Fairbanks v.
Roller, 314 F.Supp.3d 85, 94?95 (D.D.C. 2018) (McFadden, Libre By Nexus v.
Buzzfeed, Inc, 311 F.Supp.3d 149, 160?61 (D.D.C. 2018) (Mehta, 1.). Indeed, for this very
reason defense counsel candidly admitted at oral argument that defendants are ?swimming
uphill on the application ofthe Act? in this case. Mot. to Dismiss Hr?g Tr.
22 (Sept. 26, 2018) [Dkt. 41]. Given the sound reasoning employed in the foregoing
decisions, the hill is steep, and the current is strong. 1 decline to ease either.

Accordingly, defendants? motion to dismiss under Act is

DENIED.

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11. Rule 12(b)(6)

To survive a Rule 12(b)(6) motion to dismiss, ?a complaint must contain sufficient
factual matter, accepted as true, to ?state a claim to relief that is plausible on its face.m
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting BellAtl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). A facially plausible claim requires ?factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678. ?The Court assumes the truth ofall well-pleaded factual allegations
in the complaint and construes reasonable inferences from those allegations in the
plaintiff?s Sissel v. U.S. Dep?t ofHealth Human Servs., 760 F.3d 1, 4 (DC.
Cir. 2014). In addition to the complaint?s factual allegations, the Court may consider
?documents attached to or incorporated in the complaint, matters of which courts may take
judicial notice, and documents appended to a motion to dismiss whose authenticity is not
disputed, if they are referred to in the complaint and integral to a claim.? Harris v.
Amalgamated Transit Union Local 689, 825 F.Supp.2d 82, 85 (BBC. 2011).

To state a defamation claim under D.C. tort law, a plaintiff must adequately plead:
1) that he was the subject ofa false and defamatory statement; (2) that the statement was
published to a third party; (3) that publishing the statement was at least negligent; and (4)
that the plaintiff suffered either actual or legal harm.? Farah v. Esquire Mag, 736 F.3d
528, 533~34 (DC. Cir. 2013). Here, defendants contend that the Amended Complaint fails
to adequately plead the first two of these elements and that, as to the third element. a
heightened standard of fault applies and has not been suf?ciently pleaded. I disagree, and

will address these contentions in turn.

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DC. law de?nes a defamatory statement as ?one ?that tends to injure the plaintiff in
his trade, profession or community standing, or lower him in the estimation of the
community.? Kendrick v. Fox Television, 659 A.2d 814, 819 (DC. 1995) (alterations
omitted) (quoting Moss v. Stockard, 580 A.2d 1011, 1023 (DC. 1993)). To be actionable,
the statement ?must be more than unpleasant or offensive; the language must make the
plaintiff appear odious, infamous, or ridiculous.? Klayman v. 'Segal, 783 A.2d 607, 613
(DC. 2001) (internal quotation marks omitted). At this stage, however, my task is only to
?determine as a threshold matter whether? the statements identi?ed by plaintiffs are
?capable of being construed as defamatory.? Ning Ye v. Holder, 644 F.Supp.2d 112, 118
(D.D.C. 2009) (internal quotation marks omitted)). My inquiry, therefore, is limited; I may
only ?nd as a matter of law that the statements are not actionable if ?the publication is not
reasonably capable of any defamatory meaning and cannot be reasonably understood in
any defamatory sense.? Weyriclz v. The New Republic, Inc, 235 F.3d 617, 627 (DC. Cir.
2001) (quoting White v. Fraternal Ora?er ofPolice, 909 F.2d 512, 518 (DC. Cir. 1990)). 1
am also mindful of my obligations to evaluate the allegedly defamatory statements ?within
the context of the entire? publication and to consider the publication ?as a whole, in the
sense in which it would be understood by the readers to whom it was addressed.? Klayman,
783 A.2d at 613?14 (internal quotation marks omitted); Carpenter v. King, 792 F.Supp.2d
29, 34 (D.D.C. 2011) (statement should not be ?considered in isolation but rather must be
examined in the context in which it appeared? (citing Moldea v. New York Times Co., 22

F.3d 310, 313?15 (DC. Cir. 1994)).

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Taking CIR 112 as a whole, I find that a reasonable reader could interpret its
contents as defamatory to plaintiffs such that this element of the tort is adequately pleaded.
Defendants concede that at least the ?illicit cash? statement ?could be potentially
defamatory.? Mem. in Supp. of Defs.? 12(b)(6) Mot. to Dismiss Mot. to
Dismiss?) 22 [Dkt. 20-1]. That admission is warranted?plainly, an allegation that one
has bribed a public official can be understood to make one appear ?odious? or ?infamous?
in the community. See Klayman, 783 A.2d at 613. Moreover, this specific charge of
corruption might also be reasonably understood as supplying context to the purported
political and business ?favors? back and forth between plaintiffs and Putin, suggesting a
series of improper quid pro quo arrangements. See Jankovic v. Int?l Crisis Group, 494
F.3d 1080, 1091 (DC. Cir. 2007) (while ?[m]erely associating somebody with a foreign
government would not ordinarily be defamatory.? statements suggesting plaintiff ?was
actively in alliance? with and providing ?mutual support? to Serbia?s Milosevic regime
were prima facie defamatory due to ?intense antipathy? in America toward that government
(quoting Southern Air Transport, Inc. v. ABC, Inc, 877 F.2d 1010, 1015 (DC. Cir. 1989)).
And, given that CIR 1 12 is titled ?Russia/US Presidential Election: Kremlin-Alpha Group

9

Co-Operation,? a reasonable reader could further construe the allegations of a corrupt
relationship between plaintiffs and Putin?s government against the backdrop of the latter?s
attempt to interfere in the 2016 presidential election, conduct that I infer from the Amended

Complaint has generated substantial antipathy in this country. Thus, I find that plaintiffs

have sufficiently pleaded that the allegedly false statements in CIR 1 12 are defamatory.

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Plaintiffs also plausibly allege non-privileged publication to a third party. See
Farah, 736 F.3d at 533*34. The Amended Complaint claims that defendants published
CIR 112 to ?clients, news media, journalists and others,? the identities of whom are
specifically alleged. Am. Compl. 1111 6, 18, 31. To survive a motion to dismiss, a plaintiff
?need only allege enough information to apprise [defendants] of the persons or category of
persons to whom? CIR 12 was published. Armenian Assembly 0fAm., Inc. v. Cafesjian.
597 F.Supp.2d 128, 137 (D.D.C. 2009) (internal quotation marks omitted). Plaintiffs have
done so here. Moreover, taking all reasonable inferences in plaintiffs? favor, I cannot
conclude at this stage that the alleged publications were, indeed, privileged. See 12(b)(6)
Mot. to Dismiss 34?39.

Finally, the Amended Complaint plausibly alleges that defendants acted with ?at
least negligence.? See Fara/1, 736 F.3d at 533?34. According to plaintiffs, defendants
published the CIRs despite knowing that Steele had obtained the information contained
therein from sources unknown to defendants and that the information had not been veri?ed.
Am. Compl. 3?4. 13, 16, 18. Defendants apparently concede that these allegations
amount to at least negligence. Nevertheless, defendants seek dismissal on the ground that
plaintiffs are limited purpose public figures under the First Amendment and thus were
required to plead the heightened actual malice standard of culpability. See, e. New York
Times Co. v. Sullivan, 376 US. 254, 279?80 (1995). To support application of this
heightened standard here, defendants cite dozens of news articles concerning the
relationship between so-called Russian ?oligarchs,? including plaintiffs, and the Russian

state.

 

 

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Resolution of this issue turns on the application of our Circuit?s three-part test in
Waldbaum v. Fairchild Publications, Inc, 627 F.2d 1287 (DC. Cir. 1980), which requires
me to (1) ?isolate? the alleged public controversy, determine whether it genuinely exists,
and ?define its contours?; (2) analyze plaintiffs? role in the controversy to determine
whether they achieved a ?special prominence?; and (3) decide whether the alleged
defamation was ?germane to [plaintiffs?] participation in the controversy.? Id. at 1296?98.
This is a case-specific inquiry, and 1 ?must exercise care? in determining whether each of
the Waldbaum factors is met on these facts. Id. at 1296.

With the foregoing framework in mind. I unfortunately cannot resolve the public
figure issue at this stage on the limited record before me. Plaintiffs vigorously dispute the
facts and circumstances relevant to Waldbaum?s application in this case. See Mem. in
Opp?n to Defs.? Mot. to Dismiss for Failure to State a Claim 16?25 [Dkt. 25]. Moreover.
defendants have put plaintiffs? public figure status?and the attendant actual malice
standard?in issue as an af?rmative defense to defeat plaintiffs? defamation claim. A
plaintiff, however, is ?not required to negate an af?rmative defense in [the] complaint,"
and resolution of an af?rmative defense is proper on a motion to dismiss only if the facts
required to establish the defense are apparent on the face of the complaint (or ifthe plaintiff
concedes public ?gure status or the facts that establish it). See, de Csepel v. Republic
ofHungary, 714 F.3d 591, 607?08 (DC. Cir. 2013) (internal quotation marks omitted) (?as
long as a plaintiff's potential rejoinder to the affirmative defense [is not] foreclosed by the
allegations in the complaint, dismissal at the Rule 12(b)(6) stage is improper?); see also

Parisi v. Sinclair, 845 F.Supp.2d 215, 218 n.2 (D.D.C. 2012) (?Plaintiffs concede for the

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purpose of this motion [to dismiss] that plaintiffs are limited public ?gures and subject to
the actual malice standard?). Thus, where a plaintiff has not alleged facts establishing
public ?gure status and ?may be able to produce a factual basis for a ?nding that [the
plaintiff] should be considered a private ?gure with regard to the? allegedly defamatory
statements, ?there is no basis for imposing on [the plaintiff] an obligation to anticipate in
[the] complaint the need to plead facts to defend against defendants? assertion that [the
plaintiff] is a public ?gure.? MiMedx Grp., Inc. v. DBWPartners, LLC, No. 17-1925. 2018
WL 4681005, at *6 (D.D.C. Sept. 28, 2018).

Here, defendants? public ?gure defense is predicated not on the Amended
Complaint allegations but on news articles and other documents that defendants have cited
in their motion to dismiss. As such. defendants? af?rmative defense ?requires
consideration of facts outside of the complaint? and is ?inappropriate to resolve on a motion
to dismiss.? Kelly-Brown v. Winfrey, 717 F.3d 295,308 (2d Cir. 2013). ?These issues are

properly addressed at summary judgment or trial.? a?e Csepel, 714 F.3d at 608.]

 

This conclusion is further bolstered by the fact that applying Waldbaum now would
require me to take judicial notice of the substantive content of defendants? news articles.
While some courts have taken judicial notice ofnews articles, in most such cases the courts
have been careful to take notice only of the existence or nature of the articles. See, e. 
Sandza v. Barclays Bank PLC, 151 F.Supp.3d 94, 113 (D.D.C. 2015) (court may take
judicial notice of newspaper articles for the fact that they contain certain information but
may not accept the articles for the truth of their assertions); Hourarzi v. Psybersolutions,
LLC, 164 F.Supp.3d 128, 136 (D.D.C. 2016) (?the Court takesjudicial notice of the fact
that the news articles cited above concerned Plaintiff?); In re Domestic Airline Travel
Antitrust Litigation. 221 F.Supp.3d 46, 71?72 (D.D.C. 2016) (refusing to take judicial
notice of news articles prior to summary judgment because defendants provided them to
present new factual allegations to counter the complaint allegations). I see no reason to
stretch the limits of judicial notice here before the parties have had a chance to develop a
record.

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Defendants motion to dismiss for failure to state a claim under Rule 12(b)(6) is
therefore DENIED.
CONCLUSION
For the reasons stated above. def?endants? motions to dismiss under the DC. Anti-
SLAPP Act and Rule 12(b)(6) are DENIED. An order consistent with this Memorandum

Opinion is separately and contemporaneously issued herewith.

Wm


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