1 Logan V. Elia, SBN. 025009 Olen V. Lenets, SBN. 034279 2 ROSE LAW GROUP pc 3 7144 East Stetson Drive, Suite 300 Scottsdale, Arizona 85251 4 Tel: (480) 505-3936 5 Fax: (480) 505-3925 docket@roselawgroup.com 6 lelia@roselawgroup.com Attorneys for Plaintiff 7 8 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY 9 JACOB GITMAN, an individual, 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 Case No. CV2019-009187 Plaintiff, v. RESPONSE TO MOTION TO DISMISS PATRICK SIMPSON, editor and writer for (Assigned to the Honorable Michael Kemp) 14 Sternfacts; MORNINGSIDE MORTGAGE, 15 an inactive Florida corporation; A MEDIUM CORPORATION, a California foreign 16 corporation; GRANT S. STERN, President of Sternfacts; RICHARD E. SRAGOWICZ, 17 Vice President of Sternfacts; 18 THESTERNFACTS.COM, in rem; and JOHN DOE, 19 Defendants. 20 21 22 23 24 25 26 Defendants’ Motion to Dismiss should be denied because this Court is well positioned to resolve Plaintiff’s defamation and declaratory judgment claims and because Arizona residents have a significant interest in resolving this case. Defendants defamed Plaintiff by falsely claiming that he is running a “Russian mob front” and committing crimes that “would send anyone to jail,” including participating in a “Fake Debt scheme” and generally operating “in the same world” as Michael Cohen. The Court should reject Defendants’ protestations that 27 28 (Page 1, CV2019-009187) 1 2 3 4 5 6 7 these claims are not actionable defamation because they are both pure opinion and substantially true. They are purely and substantially defamatory. 1. This matter arises from defamatory statements written in an article about Plaintiff Jacob Gitman titled Under Trump, Witness Protection has been Infiltrated by the Russian Mafia and published online by Defendants. As detailed in paragraphs 40 and 41 of Plaintiff’s Complaint, the Article contains the following false and disparaging statements about Mr. Gitman: 8 9 (1) connected to one family lead by one Jacob Gitman.” 12 13 14 “Monarch is just one of the hundreds of interconnected companies registered out of the same suite at the same office building in the Bay Harbor Harbor Islands, 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 Defendants wrote a defamatory article. (2) “Monarch Air is allegedly a Russian mob front.” (3) “Sources have placed Michael Cohen in the same world as Jacob Gitman on multiple occasions as well. There are pretty significant indirect ties between the two, but no smoking gun as of yet.” 15 (4) “While Trincher and Golubchik were running what Attorney Joshua 16 Naftalis referred to as ‘one of the biggest bookmaking operations in the world.’ in New York, 17 they were also running Monarch… out of Jacob Gitman’s Kane Concourse Suite Address in 18 Miami.” 19 20 21 22 23 24 25 26 27 (5) “Jacob Gitman… purchased 200 million in the fake debt portfolios…” (6) “These aforementioned crimes above would send anyone to jail.” Read in the context of the entire Article, the statements present an entirely false picture of Jacob Gitman, a picture that is disparaging, offensive, and actionably defamatory. 2. The Article motivated this litigation against defendants in four states, including Arizona. As stated in paragraph 1 of the Complaint, Mr. Gitman owns property in Arizona, conducts business in Arizona, and is working to open an aluminum plant in Arizona. Plaintiff became aware of the defamatory article in connection with his efforts to obtain the requisite 28 (Page 2, CV2019-009187) 1 2 3 4 legal approvals and permits to open the Arizona plant. As set forth in the complaint, Plaintiff believes that the Article was written in some collaboration with an unknown John Doe and that the Article is impairing Plaintiff’s business opportunities in Arizona, including impeding his efforts to open his Arizona aluminum plant. See Complaint ¶ 1, 12, 48, and 50. 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 At the time of filing, pre-litigation investigation had revealed that the Article was written by defendant Patrick Simpson for thesternfacts.com, a website located in Arizona and registered to defendant Morningside Mortgage Corporation, an inactive Florida corporation, whose executives were defendants Grant Stern and Richard Sragowicz. Further, the Article was republished by defendant A Medium Corporation, a California corporation which is registered and doing business in Arizona.1 investigators who were able to help locate and serve defendant Patrick Simpson in New Hampshire and defendants Grant Stern and Richard Sragowicz in Florida. 13 14 15 16 17 18 19 Plaintiff is still investigating the identity and location of defendant John Doe. But Plaintiff has reason to suspect that John Doe is an Arizona resident who is assisting or leading a group of people who are attempting to exert political pressure on the Arizona governmental bodies empowered to approve and permit Plaintiff’s aluminum plant plans. As this matter proceeds, Plaintiff intends to offer evidence that the Article is circulated and repeated amongst people opposing the plant. Moreover, some of the false allegations contained in the article have been republished by Arizona media outlets, including the Arizona Republic. 20 3. 21 22 23 After filing, Plaintiff retained two separate private Plaintiff states viable claims for defamation and declaratory judgment. Dismissal pursuant to ARCP Rule 12(b)(6) is only appropriate when “plaintiff[ ] would not be entitled to relief under any interpretation of the facts susceptible of proof.” Fidelity Sec. Life Ins. Co. v. Dep't of Ins., 191 Ariz. 222, 224, ¶ 4 (1998). When adjudicating a Rule 12(b)(6) 24 motion to dismiss, “Arizona courts look only to the pleading itself and consider the well-pled 25 factual allegations contained therein” as true. Cullen v. Auto–Owners Ins. Co., 218 Ariz. 417, 26 419, ¶ 7 (2008). All material allegations in the complaint must be taken as true and read in the 27 28 1 Settlement with defendant A Medium Corporation resulted in its recent dismissal. (Page 3, CV2019-009187) 1 2 3 4 5 6 7 8 9 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 light most favorable to the Plaintiff. See Fid. Sec. Life Ins. Co. v. State, Dept. of Ins., 191 Ariz. 222, 224, ¶ 3, 954 P.2d 580, 582 (1998). Plaintiff can prove that his efforts to obtain approval to construct and operate a multimillion dollar manufacturing facility are being hindered by the false crackpot allegations that he is a Russian mobster committing crimes in furtherance of a fake debt scheme and MichaelCohen-type financial impropriety, dishonesty, and corruption. Plaintiff is incurring significant damages – including delay and attorneys’ fees – as a result of these false allegations. Contrary to the cursory argument in Defendants’ Motion to Dismiss, Defendants’ disparaging claims about Mr. Gitman are neither “pure opinion” nor “substantially true.” In fact, they are actionable defamation per se. E.g., Boswell v. Phoenix Newspapers, Inc., 152 11 Ariz. 1, 6, 730 P.2d 178, 183 (App. 1985) (holding those statements “which on their face falsely 12 tend to impeach one's honesty, integrity, or reputation,” or “which tend to injure a person in his 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 or her profession, trade or business; or statements that impute the commission of a crime involving moral turpitude,” are defamatory per se and “actionable without proof of pecuniary damages.”). 4. Arizona courts have personal jurisdiction over Defendants. Defendants wrongly argue that because they do not live in Arizona, therefore Arizona does not have jurisdiction over them. Defendants are wrong. Defendants do business with Arizona company GoDaddy, the registrar of Defendants’ Arizona website thesternfacts.com, where Defendants (potentially acting in concert with an Arizona John Doe defendant) posted defamatory statements about Plaintiff, who owns property in Arizona and does business in Arizona. Defendants’ defamatory statements are now being repeated by Arizona media outlets and Arizona citizens, including at public hearings in Arizona, in a misguided attempt to thwart Plaintiff’s significant business venture in Arizona. Arizona does have jurisdiction over this dispute. Arizona courts recognize two types of jurisdiction, general jurisdiction and specific jurisdiction. See Willams v. Lakeview Co., 199 Ariz. 1, 3, ¶¶ 5-7, 13 P.3d 280, 283 (2000). 28 (Page 4, CV2019-009187) 1 2 3 4 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 Under either type of jurisdiction, the constitutional concern is whether the defendant purposely established minimum contacts in the form state. Id. If the defendant's activities are not so pervasive as to subject them to general jurisdiction, the defendant may still be subject to specific jurisdiction. Id. at ¶ 7 Specific jurisdiction will be appropriate if (1) the defendant purposefully avails himself of the privilege of conducting business in the forum; (2) the claim arises out of or relates to the defendant's contact with the forum; and (3) the exercise of jurisdiction is reasonable. Id. Arizona courts exercise specific personal jurisdiction over a non-resident defendant to the full extent permitted by the Due Process Clause of the United States Constitution. Ariz. R. Civ. P. 4.2(a) (2020). Therefore, applicable federal court analysis of personal jurisdiction is relevant in analyzing whether or not personal jurisdiction is appropriate within this Court. In re Consol. Zicam Prod., 212 Ariz. 85, 90, ¶ 10, 127 P.3d 903, 908 (App. 2006). Importantly, the Supreme Court has upheld the assertion of jurisdiction over defendants 14 who have “purposefully reached out beyond” their State and into another. Walden v. Fiore, 571 15 U.S. 277, 285 (2014). One prime example of “minimum contact” is circulating magazines to 16 “deliberately exploit” a market in the forum State. Id. 17 18 19 20 21 22 23 24 25 26 27 In fact, in one of the most recent cases involving personal jurisdiction, the United States Supreme Court reaffirmed and clarified a seminal defamation case involving personal jurisdiction, Keeton v. Hustler Magazine. See Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773, 1782 (2017). In Keeton, a New York resident sued Hustler Magazine in New Hampshire, claiming she had been libeled in five different issues of the magazine, which had been distributed throughout the country, including New Hampshire. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984). Finding personal jurisdiction was appropriate in New Hampshire, the court relied upon the relationship between the circulation of the magazine in New Hampshire and the damaged allegedly caused in within the state. Id. at 776. Specifically, the Supreme Court noted the special nature of defamatory statements, that “false statements of the fact harm both the subject of the falsehood and the 28 (Page 5, CV2019-009187) 1 2 3 4 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 readers of the statement.” Id. The minimum contact analysis is ever evolving for conduct and legal matters arising out of internet, but all with an understanding of the special relationship between the false statements targeted specifically into a jurisdiction and its impact on the readers of the statement in the State. In the present case, the fact that the Article was written by a New Hampshire resident and posted to a website operated by an inactive Florida corporation does not divest Arizona of jurisdiction. Setting aside the factual dispute whether Defendants collaborated with an Arizona John Doe intending to thwart Mr. Gitman’s business venture in Arizona, it is entirely reasonable to litigate this case in Arizona. Plaintiff is suffering significant damage in Arizona caused by misguided opposition to his aluminum plant based on disinformation contained in the Article. Opponents to the aluminum plant are based in Arizona. Discovery about their motives and beliefs will be focused in Arizona Documents and discovery related to Plaintiff’s efforts to obtain approval for the plant are located in Arizona. Experts related to the value of Plaintiff’s business expectations from the Arizona plant may be located in Arizona. Public hearings where the baseless Russian-mob allegations are repeated occur in Arizona. When Plaintiff ultimately prevails in this case, the website, which is both the source of Plaintiff’s damages and the only known asset of the apparently defunct defendant Morningside Mortgage Corporation, is located in Arizona and subject to execution by service of an Arizona writ on its Arizona registrar GoDaddy. Additionally, Plaintiff intends to use any declaratory judgment he can obtain in this Court to inform public hearings in Arizona and potentially request retractions from certain Arizona media. It may be coincidence that defendants Stern and Sragowicz caused defendant Morningside Mortgage Corporation to hire and pay Arizona-company GoDaddy to register the website thesternfacts.com, which now hosts the defamatory statements that are garnering public interest and causing significant damage in Arizona. Regardless, defendants purposefully availed themselves of the privilege of conducting business in Arizona and Plaintiff’s claims arise out of and relate to that contact with Arizona. 28 (Page 6, CV2019-009187) 1 2 3 4 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Arizona has jurisdiction. The motion to dismiss should be denied. 5. Defendants are not entitled to dismissal for forum non conveniens. The doctrine of forum non conveniens is an exceptional tool to be employed sparingly rather than a doctrine that compels plaintiffs to choose the optimal forum for their claim. See Ravelo Monegro v. Rosa, 211 F.3d 509, 514 (9th Cir. 2000). On a motion to dismiss for forum non conveniens, the two most important factors the court looks to in deciding whether or not to retain the case, “... are (1) that since it is for the plaintiff to choose the place of suit, his choice of forum should not be disturbed except for weighty reasons, and (2) that the action will not be dismissed unless a suitable alternative forum is available to the plaintiff.” Restatement (Second) Conflicts of Law. § 84 Comment C (1971); see also Cal Fed Partners v. Heers, 156 Ariz. 245, 246, 751 P.2d 561,562 (App. 1987). A defendant seeking dismissal on forum non conveniens must prevail on two elements: (1) the defendant must show there is an available and adequate alternative forum to hear the case; and (2) the defendant must show that on the balance of both public and private factors, the alternative forum is more convenient to litigate the case.” Parra v. Continental Tire North America, Inc., 222 Ariz. 212, 215, ¶ 10, 213 P.3d 361, 364 (App. 2009). It should be noted, “[d]eference should be given to plaintiff's choice of forum.” Cal. Fed., 156 Ariz. at 246. In addition, Arizona has a fundamental interest in resolving controversies involving its citizens. Id. Here, Movants cannot make a sufficient showing to overcome the deference given to Mr. Gitman in choosing to litigate this matter in Arizona, particularly in light of the arguments regarding personal jurisdiction over the Movants. The private factors include relative ease of access to sources of proof, availability of compulsory process for attendance of unwilling, the cost of obtaining attendance of witnesses, possibility to view premises, and all other practical problems that make trial expeditious and inexpensive. Parra, 222 Ariz. at 215, ¶ 12. Defendants do not even try to claim that the public factors weigh in their favor. 27 28 (Page 7, CV2019-009187) 1 2 3 4 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 In fact, Defendants entirely fail to meet the necessary elements to prevail on their claim for forum non conveniens. They fail to adequately establish an available and adequate forum, simply indicating somewhere in Florida or New Hampshire may be more applicable somehow. Secondly, the Defendants fail to address the various private and public factors, simply ending with a conclusory statement that the private factors somehow weigh heavily in favor of an unnamed alternative venue. Defendants fail to address Mr. Gitman’s substantial business ties to Arizona, the damage relating to his reputation in the State and how the Article has substantially hindered the progress of the aluminum factory. Arizona is actually the most convenient forum to litigate this case. Events occurring in Arizona are the main reason Plaintiff chose to initiate litigation about a tinfoil-hat Article hosted on an obscure blog owned by a defunct mortgage brokerage. Developments in the aluminum plant project may ultimately drive this litigation, especially if Defendants cannot begin to pay for the damage they have already done. It does not make sense to require Plaintiff to obtain counsel in Florida or New Hampshire to stay abreast of the aluminum plant developments and hearings in Arizona. If Defendants were to somehow prevail on their request for fees, Plaintiff has assets in Arizona subject to execution. If Plaintiff prevails, the worth of Plaintiff’s judgment is primarily its worth in Arizona. Likewise, Arizona is the likely source of most discovery. Potentially, the parties will be deposed. But there is no reason to think significant discovery on liability is necessary. Plaintiff is not a Russian mobster running fake debt schemes and hobnobbing with Michael Cohen. There is no reason to believe evidence for those claims exists in Florida or New Hampshire. Instead, the bulk of discovery will center on establishing that the Article motivates the misguided opposition to the aluminum plant and on quantifying the unnecessary costs such misguided opposition has forced Plaintiff to bear. Such information will be conveniently gathered in Arizona and nowhere else. 6. This Court should ignore affirmative defenses raised in the motion to dismiss. 28 (Page 8, CV2019-009187) 1 2 3 4 5 6 7 8 9 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 12 13 14 15 16 17 Defendants argue Mr. Stern and Mr. Sragowicz should be dismissed because they have no individual liability for the damage caused by the Article alternatively because the Article is true, or “carefully investigated,” or not motivated by an improper purpose, or because they are shielded from liability by the corporate form that was reinstated post-complaint, or because they will swear later that they did not authorize or participate in the tortious conduct of their defunct entity that is surely not their alter ego. These fact-based defenses are not properly raised in a motion to dismiss. The Court should reserve judgment on these questions of fact until after evidence has been presented. The Motion to Dismiss should be denied. 7. Conclusion: Deny the Motion. Defendants made plainly defamatory statements about Plaintiff and those statements are causing Plaintiff significant harm in Arizona. The Defendants in this case are spread around the country. But the damages, relevant discovery, public interest, and viable remedies are all centered in Arizona. This Court should deny the Motion to Dismiss and allow this case to proceed in Arizona. RESPECTFULLY SUBMITTED this 26th day of February, 2020. ROSE LAW GROUP pc 18 19 20 21 22 By:/s/ Logan V. Elia Logan V. Elia Olen V. Lenets 7144 East Stetson Drive, Suite 300 Scottsdale, Arizona 85251 Attorneys for Plaintiff 23 24 25 26 27 28 (Page 9, CV2019-009187) 1 2 ORIGINAL of the foregoing e-filed with AZ Turbo Court this 26th day of February, 2020. 3 4 5 6 7 8 9 COPY of the foregoing electronically delivered via the court’s electronic e-filing method, this same day to: The Honorable Michael Kemp Maricopa County Superior Court COPY of the foregoing email/mailed on this same day to: 11 7144 E. Stetson Drive, Suite 300 Scottsdale, AZ 85251 Rose Law Group pc 10 Clerk of the Court Maricopa County Superior Court 12 13 14 15 Paul M. Weich Law Offices of Paul Weich 2234 South McClintock Drive Tempe, Arizona 85282 (480) 759-1983 Paul.weich@pwlawarizona.com Attorneys for All Defendants EXCEPT A Medium Corporation 16 17 By: Logan Elia 18 19 20 21 22 23 24 25 26 27 28 (Page 10, CV2019-009187)