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UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

Rev. Fr. Emmanuel Lemelson and Case No. 16-11650
Lemelson Capital Management, LLC

Plaintiffs,

vs.

Bloomberg LP, Matthew Robinson, as an individual
and as an agent of Bloomberg LP, and Jesse
Westbrook, as an individual and as an agent of
Bloomberg LP
Defendants.

PLAINTIFFS’ RESPONSE IN OPPOSITION TO DEFENDANTS’ MOTION TO
DISMISS

PRELIMINARY STATEMENT

This defamation lawsuit was filed by Rev. Fr. Emmanuel Lemelson (“Fr. Lemelson”)

and Lemelson Capital Management, LLC (“Lemelson Capital”) regarding a false and

defamatory article which was published on March 18, 2016 referencing his analysis of Ligand

Pharmaceuticals (“Ligand”). The reporter, Matthew Robinson, and Bloomberg, reiterated and

made several additional false statements in a televised interview on or about that date on

Bloomberg’s television station. The Defendants’ article and interview falsely stated that Fr.

Lemelson was being investigated by the Securities and Exchange Commission for attempting to

illegally manipulate stock prices.

For Fr. Lemelson, the lawsuit’s goal is “the protection of his own reputation from

unjustified invasion and wrongful hurt” reflecting the “basic concept of the essential dignity and

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worth of every human being—a concept at the root of any decent system of ordered liberty.”

Rosenblatt v. Baer, 383 U.S. 75, 92 (1966) (Stewart, J., concurring). In addition, the Plaintiffs

have alleged significant financial harm due to the Article and Interview (Compl. p.5, ¶¶83-106,

Ex. A and Ex. B), including the loss of potential clients, investors, and venders. (Compl. ¶¶ 85-

86).

The United States Securities and Exchange Commission (the “SEC”) has broad powers to

investigate past, ongoing, or prospective violations of the federal securities laws, SEC rules or

regulations, and self-regulatory organizations ("SROs") rules under Section 20(a) of the

Securities Act of 1933 (the "Securities Act"), Section 8(e) of the Securities Act, Section 21(a)(1)

of the Securities Exchange Act of 1934 (the "Exchange Act"), Section 21(a)(2) of the Exchange

Act; Section 209(a) of the Investment Advisers Act of 1940 (the "Advisers Act"), Section 42(a)

of the Investment Company Act of 1940 (the "Investment Company Act"), Section 18(a) of the

Public Utility Holding Company Act of 1935 (the "Public Utility Holding Company Act"), and

Section 321(a) of the Trust Indenture Act of 1939 (the "Trust Indenture Act"). Fr. Lemelson was

contacted as a witness by the SEC regarding its investigation of Ligand. This does not mean that

he was being investigated or probed for any wrongdoing.

The Defendants do not dispute that its specific allegation that the Plaintiffs were

being investigated by the Securities and Exchange Commission (the “SEC”) for violating

securities law is materially false. The article and accompanied news report by Bloomberg are

unverified and untrue. (Compl., Ex. A (the “Article”) & Ex. B (the “Interview”). No sources are

cited in the article. The Defendants have so little confidence in the truth of their own story that

their counsel has not submitted an affidavit in support of the motion to dismiss. The gravamen of

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Defendants’ Rule 12(b)(6) motion is that the Complaint must be dismissed because it does

adequately plead “actual malice.” Plaintiffs’ counsel argues that, since the Plaintiff is a private

figure, or at worst, a “limited public figure”, actual malice need not be specifically pled in this

Complaint. However, to pass legal muster, actual malice has been adequately pled by the

Plaintiffs under Fed. R. Civ. P. 12(b)(6).

The Complaint, which contains the actual transcript of the Article and Interview, provide

specific examples of the Defendants’ misconduct. 1 See Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009). “Because direct evidence of actual malice is rare, it may be proved through inference,

and circumstantial evidence.” Levesque v. Doocy, 560 F.3d 82, 90-91 (1st Cir. 2009) (internal

citations omitted); Fox Entm't Grp., Inc. v. Abdel-Hafiz, 240 S.W.3d 524, 533 (Tex. App. 2007)

(“Actual malice … can [be] prove[d] through objective evidence about the publication’s

circumstances and the defendant’s conduct at the time of publication.”); Wormwood v. Lee, 226

Mass. 339, 341, 115 N.E. 494 (1917) (“[i]n an action for slander, upon proof that words in

themselves actionable have been spoken, there is a presumption of malice as an inference of

law”).

Fr. Lemelson, before the article was published, told Matthew Robinson that he was not

being investigated for any wrongdoing by the SEC. Compl. ¶¶ 32 and 39. There is nothing

unusual about an investment advisor being contacted by the SEC about matters that it is

working on 2, particularly when the advisor had been a vocal critic of the firm in question and

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Bloomberg has published several versions of the Article which it has disseminated.
2
Pursuant to 17(a) of the Exchange Act, 15 U.S.C. 78q, 31(b) of the Investment Company Act, id. 80a- 30, and 204
of the Advisers Act, id. 80b-4, the staff may obtain and examine copies of records from, among others, any broker-
dealer, national securities exchange, registered municipal securities dealer, transfer agent, clearing agency,
registered investment company or registered investment adviser. Rules 17a-3 and 17a-4, 17 C.F.R. 240.17a-3,

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submitted a whistleblower complaint. The SEC has a wide net of enforcement tools to

investigate any legal matters that may arise. 3 The SEC and its employees have strict guidelines

regarding names of persons being investigated or information about potential enforcement

actions ---- making it highly unlikely that Bloomberg had any information about Fr. Lemelson’s

participation as a witness in the investigation involving Ligand.

Recent events that have occurred have proved Bloomberg’s story that Fr. Lemelson was

being investigated for stock manipulation to be false and that the most likely target of the SEC

investigation is in fact Ligand. By year end 2016, no less than a dozen law firms were soliciting

clients for a class-action lawsuit against Ligand for securities fraud in the U.S. District Court for

the Southern District of California. (See “ Plaintiffs’ Response-Exhibit A”). 4 The plaintiff in

that case alleges that Ligand made false and/or misleading statements that resulted in an

overstated value of certain Deferred Tax Assets by approximately $27.5 million or 13%. Id. In

addition, it is charged that Ligand’s outstanding convertible senior unsecured notes due 2019

should have been classified as short-term debt rather than long-term debt as of December 31,

2015, and that Ligand Pharmaceuticals Inc. did not maintain effective controls over the accuracy

240.17a-4, set forth the records required to be maintained by registered securities exchange members, brokers, and
dealers. Rule 31 of the Investment Company Act, id. 270.31a-1-a-3, sets forth the records required to be maintained
by registered investment companies, certain majority-owned subsidiaries thereof and other persons having
transactions with registered investment companies. Rules 204-2 and 204-3 of the Advisers Act, id. 204-2, 204-3, set
forth the books and records required to be maintained by an investment adviser.
3
https://www.sec.gov/answers/investg.htm-Securities and Exchange Commission (SEC) investigations are
conducted confidentially to protect evidence and reputations. Important documents could be destroyed if an
investigation is publicly announced, so confidential treatment may help to preserve key evidence in a case. A
confidential process also protects the reputations of companies and individuals where the SEC finds no wrongdoing
by the firm or the individuals that were the subject of the investigation. As a result, the SEC generally will not
confirm or deny the existence of an investigation unless and until it becomes a matter of public record.
4
Press releases by the law firms soliciting clients for the class-action suit can be accessed at
https://finance.yahoo.com/quote/LGND?ltr=1.

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and presentation of the accounting for income taxes related to complex 5transactions. Id. It is

also alleged that Ligand lacked effective internal control over financial reporting, and, as a

result, its business, operations and prospects were materially false and misleading. Id.

Besides justifying Fr. Lemelson’s point about Ligand’s questionable finances, the

lawsuit against Ligand is proof of the Defendants’ malice. The Defendants obviously willfully

omitted true facts about Ligand and the SEC’s investigation to disparage Fr. Lemelson. It has

been almost a year since Bloomberg published its false and defamatory article yet no

enforcement action has been taken against Fr. Lemelson or anyone else associated with him.

Almost three months before the article was published by the Defendants, Fr. Lemelson

submitted a whistleblower complaint against Ligand. Compl. ¶¶ 26 and 27. The real issues

which affect investors, questionable statements in public filings by Ligand, were available to

Mr. Robinson and Bloomberg but were ignored.

Neither individual defendant nor anyone from Bloomberg have submitted an affidavit to

support their false assertions that, at the time the article was published, the Plaintiffs were being

investigated by the Securities and Exchange Commission (“SEC”) for possible stock

manipulation. (Compl., Ex. A (the “Article”) & Ex. B (the “Interview”).) The Defendants are

trying to get this case dismissed without providing a scintilla of evidence of the truth of the

article.

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Fr. Lemelson publicly published his reports on Ligand in 2014, and Robinson had access to these reports to
investigate the accuracy of Fr. Lemelson claims which have since been proven correct with Ligand restating their
financial statements.

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The memorandum in support of the Defendants’ motion to dismiss simply reiterates false

and unproven reports that Fr. Lemelson was being investigated by the SEC for possible

wrongdoing. (Compl., Ex. A (the “Article”) & Ex. B (the “Interview”)). A couple of caveats

thrown out by the Defendants’ counsel that Fr. Lemelson “hasn’t been accused of wrongdoing”

and the investigation was “a preliminary step” and may not ever result in “an enforcement

action” by the SEC do not offset the false, damaging facts and innuendo (Article at 2; see also

Interview at 2.) of the Defendants article and the bald-faced lie that Fr. Lemelson was being

investigated for stock manipulation. By way of example, if Bloomberg has published an article

stating that Ligand was being investigated by the SEC with the caveat that it was just a

“preliminary step”, the article would send the stock price plummeting. In like fashion, the

Bloomberg article sent Fr. Emmanuel’s reputation plummeted.

The case cited by the Defendants in support of their position by Massachusetts Supreme

Judicial Court, Foley v. Lowell Sun Publishing Co., 404 Mass. 9, 11-12 (1989), is not applicable

here. In the Foley case, the Lowell Sun accurately stated that the subject of its story was arrested

as it was stated in the article. In addition, there are no unnamed sources in the article and there

was no way that a reasonable reader could not conclude that the Sun was accusing Foley of

assaulting the officer. See Lambert v. Providence Journal Co., 508 F.2d 656, 658 (1st Cir.), cert.

denied.

Fr. Lemelson has never been arrested and is not, and has never, been the subject of any

investigation for wrongdoing. The SEC, as a matter of law and practice, does not publicize

investigations or release the contents of cases it is evaluating for enforcement action. The

coverage of Fr. Lemelson by the Defendants is in fact “fake news”. The confidential nature of

SEC investigations make it unlikely it could produce an accurate story to its readers.

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The likely target of any investigation is Ligand. Bloomberg, if it wanted to produce some real

news, not fake news, should have been looking at Ligand not at Fr. Lemelson who was simply

expressing an honest opinion as an analyst. Since this case has been filed, many of Fr.

Lemelson’s observations about the questionable activities of Ligand have been confirmed 6. A

responsible media outlet would make a good faith effort to get the real story of Ligand, which

affects investors and the market. Instead, it stands behind its discredited work.

Fr. Lemelson under the law is not a public figure. Fr. Lemelson is not an entertainment

figure nor a politician. Nonethelesss, it is clear that Bloomberg published with actual malice 7

because it knew its statements were false when published. Bloomberg’s failure to provide an

affidavit from either Defendants shows the Court that Bloomberg is unwilling to stand behind

the veracity of its work. The cases cited to justify dismissal, which relate to political figures and

entertainment figures. are not applicable here. See Schatz v. Republican State Leadership

Comm., 669 F.3d 50, 56-58 (1st Cir. 2012) (Opponents for political office, provided that they do

not act with actual malice, can badmouth each other with unfair and one-sided attacks) ; Shay v.

Walters, 702 F.3d 76, 82-83 (1st Cir. 2012) ( Alleged defamatory statements by noted television

personality Barbara Walters could not have caused harm to the plaintiff in a considerable

segment of the community because, according to the Complaint, only a few could have

understood oblique comments).

FACTS

6
For example, at least twelve law firms are involved in pursuing a class action lawsuit against Ligand for securities
fraud in U.S. District Court for the Southern District of California. A copy of the Complaint against Ligand is
marked “Exhibit A” and attached to this brief.
7
The defendant’s contempt for Fr. Lemelson is hardly disguised in the TV segment they produced, during which
they repeatedly chuckled, laughed and demeaned Fr. Leeson and his religious vocation.

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It is not disputed by the Defendants that the statements published and disseminated by

Bloomberg are provably false. The statements made by Bloomberg start with its false headline in

its televised interview that “Hedge Fund Priest’s Trades Probed By Wall Street Cop.” 8 Statements

made and published by the Defendants that say that: 1) the “SEC examining whether he spread

false statements about stocks,” 2)“A priest (Fr. Lemelson) who sidelines as a hedge-fund manager

is being investigated by U.S. regulators for possible stock manipulation,” and 3) “The Securities

and Exchange Commission is examining whether the Reverend Emmanuel Lemelson of

Massachusetts made false statements about companies he was shorting, prompting scrutiny of

trading skills that the cleric has described as a ‘gift from God’” are all false and untrue. (Compl.,

Ex. A & Ex. B).

The point of the article and the interview, the starting with its false statements about Fr.

Lemelson being investigated for stock manipulation by the SEC, is that Fr. Lemelson spread false

information for his own benefit. The clear implication is that, even if Fr. Lemelson did nothing

illegal, he may have done something wrong. The article’s source is not based upon any actual

information from the SEC but, instead, seems to have been ghost-written by a critic who is hiding

behind the cloak of Bloomberg to caste false aspersions on Fr. Lemelson’s reputation and

character.

The cumulative effect of statements like, “Investors are free to criticize companies and

their management, but they can’t spread inaccurate information in order to profit,” (Compl., Ex.

A & Ex. B) and that “historically, the SEC has had difficulty in bringing ‘short-and-distort’ cases,

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Importantly the interview does not attribute the statement to “sources”, but rather makes an affirmative statement
as if provable fact.

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since the regulator has to prove a misstatement of fact rather than opinion, according to Stephen

Crimmins, a former SEC attorney who’s now with the firm Murphy & McGonigle. Wall Street

executives famously complained that short-sellers were spreading false rumors about their banks

during the 2008 financial crisis, but the allegations didn’t result in SEC enforcement actions,”

(Compl., Ex. A & Ex. B) falsely implies that the Fr. Lemelson was unethical. The plain meaning

of the Defendants’ statements is that, if the SEC did not bring any enforcement action, it does not

mean the Plaintiffs are innocent and that, no matter what the results of the investigation are, Fr.

Lemelson is still guilty.

In his televised interview with Bloomberg, 9Matthew Robinson reiterates the false

narrative about Fr. Lemelson’s dishonesty. Robinson’s statement, “Right, so the issue that the

SEC is looking at is if you’re putting out false information about companies. This is beyond like

. . . you know . . . I think . . . you know . . . management is not great or that they’re running the

company into the ground cuz that’s very clearly an opinion. But if you are going to say . . . you

know . . . that earnings are going to miss or you think something very specific and bet against it,

you can’t do that, that’s against securities laws,” (Compl. ¶¶ 66, Ex.B) bolsters the false narrative

about Fr. Lemelson being dishonest. The statement in Robinson’s article that “The SEC has had

more success suing ‘pump-and-dump’ fraudsters, where scammers promote stocks with fake

information to inflate prices and then sell out” implies that Fr. Lemelson is a “fraudster” and a

“scammer.” (Compl. ¶¶ 21, Ex.. A). The defamatory meanings of the Defendants’ words

examined in light of the publication as a whole and the medium and social context in which they

have been published, directly imply that the Plaintiffs acted unethically and dishonestly. Damon

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After Fr. Lemelson complained about the veracity of the article to virtually every editor at Bloomberg, Robinson
proceeded, in reckless disregard, to reiterate and expand upon his false and defamatory statements on television.

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v. Moore, 520 F.3d 98, 105 (1st Cir. 2008) See, e.g., Lasky v. Am. Broad. Cos., Inc., 631 F.Supp.

962, 970 (S.D.N.Y. 1986) ("In studying a television program for . . . defamatory meanings, a

court must not confine its analysis to the words alone. . . . It is the entirety of the program, both

audio and video, that must be considered in determining whether . . . [it] is reasonably

susceptible of a defamatory meaning.").

The Defendants could have questioned the public assertions in the Ligand’s financial

statements if it wanted to provide a balanced story about Fr. Lemelson but didn’t. The fact that

the Defendants deliberately omitted facts 10 that supported Fr. Lemelson’s opinion is proof of the

Defendants’ malice and intentional misrepresentations. The Defendants do not dispute that Fr.

Lemelson’s statement to Robinson, prior to the publication of the article, that he knew of an

investigation involving Ligand are true. Yet this important fact was omitted -------- creating a

false and defamatory meaning to Bloomberg’s readers and viewers. Facts extrinsic to the

publication of the article which did not fit Bloomberg’s narrative were not disclosed to their

readers and created a false defamatory meaning, creating defamation by implication and libel by

implication, and omission.

The Defendants are mocking Fr. Lemelson’s religion. The reporter on the television

interview said: “Ah, he (“Fr. Lemelson”) fancies himself as I mentioned as some sort of a

clairvoyant. I (smiles and gestures) suppose that’s helpful if that is the case especially if you are

shorting stocks.” (Compl., Ex. A & Ex. B) The statements by the Defendants regarding Fr.

10
In this case the defendants omitted the fact that Fr. Lemelson had explained that he was aware of an investigation
involving Ligand but he was not the target of an investigation.

10
11
Lemelson being a “hedge fund priest” and having “clairvoyant powers” are slurs that are, or

have been, used as insinuations to mock Fr. Lemelson, his priestly vocation, his religious

beliefs, and the beliefs of his Church. Matthew Robinson’s statement on the television

interview where he states that Fr. Lemelson “is like the opposite of the Wolf of Wall Street 12

where he was . . . Belfort was trying to promote the stock and then sell out before anyone else

did. This is . . . you know, you know . . .the inverse of that where you’re taking a short position,

you’re betting against and then trying to push the stock down” (Compl., Ex. A & Ex. B),

examined in light of the publication as a whole and the medium and social context in which they

have been published, directly imply that the Plaintiffs acted unethically and dishonestly. 13 Since

March 18, 2016 through today, more than twenty- eight other global media outlets and sites

have republished and repeated the defamatory story published by Bloomberg. Compl. ¶¶ 26 and

27.

According to the official records of the Securities and Exchange Commission, the

Defendants never made any requests for information about the Plaintiffs and Ligand before

publishing the defamatory story14. Compl. ¶¶37 and 38.. According to the Complaint,

investigators from the Securities and Exchange Commission have confirmed to Fr. Lemelson

and his attorney, that neither he, personally, nor Lemelson Capital Management were ever the

target of any SEC investigation, nor was either named in any order of investigation. Further in

11
Fr. Lemelson has never claimed that he has clairvoyant powers or could “see into the future.” The Wall Street
Journal article which Bloomberg used as a reference is inaccurate. Fr. Lemelson was never quoted in the article.
12
https://en.wikipedia.org/wiki/Jordan_Belfort- Jordan Ross Belfort pleaded guilty to fraud and related crimes in
connection with stock-market manipulation and running a boiler room as part of a penny-stock scam. Belfort spent
22 months in prison as part of an agreement under which he gave testimony against numerous partners and
subordinates in his fraud scheme. ]He published the memoir The Wolf of Wall Street which was adapted into a film
and released in 2013. The film was directed by Martin Scorsese and starred Leonardo DiCaprio as Belfort.
13
Ibid.
14
The SEC typically responds to Freedom of Information Acts (FOIA) requests promptly. It is clear that the
defendants knew how to use the SEC FOIA request system, as defendant Robinson had made a FOIA request to the
SEC during approximately the same time period for an article he was writing for Bloomberg about SAC capital.

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April 2016, Fr. Lemelson spoke with the SEC who again confirmed that neither he nor his firm

was the target of any SEC investigation, that neither he nor his firm were named in any order of

investigation, and that the SEC had no open investigations involving either WWE or Skechers

as Robinson article had also reported. Compl. ¶¶36-39 and 27. Matthew Robinson, Jesse

Westbrook, and Bloomberg knew this but did not tell its readers. Matthew Robinson’s statement

that Fr. Lemelson “is being investigated by U.S. regulators for possible stock manipulation,

prompting scrutiny of trading skills” is completely false. ( Compl. ¶¶ 40-43). The Defendants

knew, or should have known, that the Plaintiffs were not the target of any investigation or

enforcement action, and had not been named in any order of investigation by any regulator,

including the Securities and Exchange Commission, for any illegal activities. (Compl. ¶¶44, Ex.

A).

The statement by the Defendants that says, “Investors are free to criticize companies and

their management, but they can’t spread inaccurate information in order to profit,” (Compl. ¶¶ 47,

Ex.A) creates a false, defamatory implication against Fr. Lemelson that he has spread false

information and rumors to profit. The statement by the Defendants that says, “A report published

on the financial markets website Seeking Alpha in June 2014 under the pseudonym Amvona said

Ligand was in imminent risk of declaring bankruptcy and that demand for one of its drugs,

Promacta, was rapidly declining. Within minutes, Ligand shares fell more than 7 percent. Since

then, Promacta sales reached an all-time quarterly high and shares of the La Jolla, California-based

company have increased 50 percent to $97.22 through yesterday,” Compl. ¶¶ 48 creates a false,

defamatory implication against the Plaintiff that he has spread false information and rumors to

unfairly profit. 15

15
http://www.sec.gov/answers/pumpdump.htm -Pump-and-dump” schemes involve the touting of a company’s
stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace.

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The research reports cited by the Plaintiffs, written about by the Defendants, state that

Promacta, a drug licensed by Ligand, is facing competitive threats, and that the company’s recent

debt offering increased the specter of bankruptcy. The Plaintiff did not say, as Robinson stated,

that Ligand was in imminent threat of declaring bankruptcy. The statement published by the

Defendant that says, “a report published on the financial markets website Seeking Alpha in June

2014 under the pseudonym Amvona,” (Compl. ¶¶ 48, Ex. A), falsely implies that Fr. Lemelson

hid his real identity from his readers. This is a strategy to impugn Fr. Lemelson by claiming that

he uses pseudonyms. In fact, Amvona is the name of the fund which is overseen by Lemelson

Capital. Further, Fr. Lemelson’s profile on SeekingAlpha clearly states that the name of the fund

is the Amvona Fund, and that the account is owned by Lemelson Capital Management, LLC.

(Compl. ¶¶50, Exh A)

Even if the Plaintiff was being investigated for wrongdoing, it would be impossible for

the Defendants to find out any specific details of the investigation. There are strict guidelines

issued by the Securities and Exchange Commission in place. Confidentiality policies and

obligations under Section 203.5 of Title 17 of the Code of Federal Regulations governs all SEC

investigations. 16

These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and
chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that
urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same
sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use
an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company
insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the
buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price
typically falls, and investors lose their money.
16
Unless otherwise ordered by the Commission, all formal investigative proceedings shall be non-public.
17 CFR 203.5 Non-public formal investigative proceedings. (Code of Federal Regulations (2016 Edition))

13
The SEC Staff goes to great lengths not to reveal publicly information about its

investigations and entities that might be under investigation unless and until a determination is

made to commence an enforcement proceeding because the SEC has officially recognized how

harmful these disclosures can be. 17 A way that an investigation may become public is when a

company must disclose material public information to comply with Regulation Fair Disclosure

(“Regulation FD”). 18

While it is impossible to know what issues the SEC is working on, Ligand recently

released required disclosures which identify past material misstatements in public filings and

disclosures to investors in 2014 and 2015.(Plaintiffs’ Response – Exhibit B). If anyone was

being investigated by the SEC, the likely target is Ligand, not Fr. Lemelson. The omission of

facts which could be exculpatory toward Fr. Lemelson and the Defendants’ statement that he

spread false rumors via a pseudonym sends a signal to investors and potential business

associates that Fr. Lemelson was acting dishonestly. In short and distort cases, false rumors are

generally spread using pseudonyms to hide the source of the disinformation. Matthew

Robinson’s comparison of Fr. Lemelson to Jordan Belfort, an infamous convicted felon, who is

also known as the “Wolf of Wall Street, draws an implication that Fr. Lemelson is doing

something immoral and illegal. (Compl. ¶ 71, Exhibit A)

17
The argument by the Defendants’ counsel that “reasonable readers” understand that, when someone is
investigated by the SEC, that doesn’t mean they’ve ….engaged in any wrongdoing” is completely officially refuted
by the SEC, who recognize the harm in in revealing confidential information about investigations.
18
17 CFR 243.100; https://www.sec.gov/answers/regfd.htm- Regulation FD addresses the selective disclosure of
information by publicly traded companies and other issuers. Regulation FD provides that when an issuer discloses
material nonpublic information to certain individuals or entities—generally, securities market professionals, such as
stock analysts, or holders of the issuer's securities who may well trade on the basis of the information—the issuer
must make public disclosure of that information. In this way, Regulation FD aims to promote the full and fair
disclosure.

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ARGUMENT

Standard Of Review

When evaluating the sufficiency of a complaint pursuant to Fed. R. Civ. P. 12(b)(6), the

Court must accept as true all well-pled facts in the light most favorable to the plaintiff and draws

all reasonable inferences from those facts in favor of the plaintiff. US Ex Rel Hutcheson v.

Blackstone Med., Inc., 647 F.3d 377, 384 (1st Cir. 2011). Although detailed factual allegations

are not required to survive a motion to dismiss "more than labels and conclusions" are

required. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A "formulaic recitation of the

elements of a cause of action" is not enough. Id. The facts alleged must "raise a right to relief

above the speculative level." Id. The plaintiff must "nudge[] [the] claims across the line from

conceivable to plausible," or the claims will be dismissed. Id. at 570. "The make-or-break

standard . . . is that the combined allegations, taken as true, must state a plausible, not a merely

conceivable, case for relief." Sepulveda-Villarini v. Dep't of Educ. of P.R., 628 F.3d 25, 29 (1st

Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Twombly, 550 U.S. at 555.

Because a motion to dismiss a complaint under Rule 12(b)(6), involves some assessment

of the merits, the facts contained in the pleadings must be examined in the light most favorable

to the party opposing the motion -- here, the plaintiff -- and draw all reasonable inferences in the

plaintiff's favor. R.G. Fin. Corp. v. Vergara-Nunez, 446 F.3d 178, 182 (1st Cir. 2006). "The

court may supplement the facts contained in the pleadings by considering documents fairly

incorporated therein and facts susceptible to judicial notice." R.G. Fin., 446 F.3d at 182.

15
.In reviewing a Rule 12(b)(6) motion, we may consider "documents the authenticity of

which are not disputed by the parties; . . . documents central to plaintiffs' claim; [and]

documents sufficiently referred to in the complaint." Watterson v. Page, 987 F.2d 1, 3 (1st Cir.

1993) (under Rule 12(b)(6)). This is true even when the documents are incorporated into the

movant's pleadings. Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 17 (1st Cir. 1998)

("When, as now, a complaint's factual allegations are expressly linked to -- and admittedly

dependent upon -- a document [offered by the movant] (the authenticity of which is not

challenged), that document effectively merges into the pleadings and the trial court can review it

. . . ." (citing Fudge v. Penthouse Int'l, Ltd., 840 F.2d 1012, 1015 (1st Cir. 1988))). See also

Dirrane v. Brookline Police Dep't, 315 F.3d 65, 69 n.2 (1st Cir. 2002).

Since a given statement, even if libelous, must also be false to give rise to a cause of

action, the defendant may assert the statement's truth as an absolute defense to a libel claim.

Mass. Sch. of Law at Andover, 142 F.3d at 42 (citing Bander v. Metro. Life Ins. Co., 313 Mass.

337, 47 N.E.2d 595, 598 (Mass. 1943)); McAvoy, 518 N.E.2d at 517. The Defendants have not

contested the Plaintiffs’ allegations that there are many false statements in its article. To prevail

on a defamation claim under Massachusetts law, a plaintiff must also show that the defendant

was at fault for the publication of a false statement of and concerning the plaintiff which was

capable of damaging his or her reputation in the community, and which either caused economic

loss or is actionable without proof of economic loss.” Damon v. Moore, 520 F.3d 98, 105 (1st

Cir. 2008). See Freeman v. Town of Hudson, 849 F. Supp. 2d 138, 160 (D. Mass. 2012). (To

state a claim for defamation under Massachusetts law, a plaintiff must allege that the defendant

was at fault for the publication of a false statement of and concerning the plaintiff which was

capable of damaging his or her reputation in the community, and which either caused economic

16
loss or is actionable without proof of economic loss.) The Defendants defamatory statements,

e.g. " Hedge Fund Priest's Trades Probed by Wall Street Cop”, “SEC examining whether he

spread false statements about stocks” “A priest who sidelines as a hedge-fund manager is being

investigated by U.S. regulators for possible stock manipulation, ” and “The Securities and

Exchange Commission is examining whether the Reverend Emmanuel Lemelson of

Massachusetts made false statements about companies he was shorting……prompting scrutiny

of trading skills that the cleric has described as a ‘gift from God’,” are specifically pled.

(Complaint, Ex. A)

I. PLAINTIFFS STATE A COGNIZABLE CLAIM FOR DEFAMATION

Courts analyze such claims under the traditional Rule 12(b)(6) standard set forth

in Nader v. Citron, 372 Mass 96, 98 (1977). See Eyal v. Helen Broadcasting Corp., 411 Mass.

426, 429 (1991) (defamation claims "should be analyzed under the traditional standard governing

rule12(b)(6)" with defects, if any, "to await exposure at the summary judgment stage or later").

Unless it appears "beyond doubt" that a plaintiff will be unable to prove a set of facts that would

support a finding that the defendant's statements were defamatory, a motion to dismiss must be

denied. See Nader, 372 Mass at 98. The First Circuit has effectively overturned cases requiring a

heightened pleading standard. See Bleau v. Greater Lynn Mental Health & Retardation Assoc.,

371 F. Supp. 2d 1, 2 (D. Mass. 2005); North Shore Pharmacy Services, Inc. v. Breslin Associates

Consulting, 491 F. Supp. 2d 111, 124 (D. Mass. 2007) ("claims for defamation are subject to the

notice pleading requirements set forth in Fed. R. Civ. P. 8, rather than the heightened pleading

requirements of Rule 9"); Davidson v. Cao, 21 1 F.Supp.2d 264, 276 (D. Mass. 2002) (same).

Accordingly, Massachusetts law is settled that a defamation claim should not be

17
dismissed unless there is no way that the statement complained of could reasonably be

understood to discredit the plaintiff in the minds of a considerable and respectable portion of the

community. See Poland v. Post Pub. Co., 330 Mass. 701, 704 (1953); Nader, 372 Mass. at 98.

Applying this standard, taking all reasonable inferences in the Plaintiffs' favor, it cannot be said

that it appears "beyond doubt" that the Plaintiffs "can prove no set of facts in support of their

claim which would entitle them to relief." Eyal, 411 Mass. at 231.

As previously stated, the SEC generally does not permit public disclosure of

investigations because of the harm to those who are innocent of wrongdoing. The Court should

follow the precedent of the SEC and recognize this harm, which is also identified in the

Complaint.

A. The Complaint Properly Alleges all Elements of Defamation

Under Massachusetts law, a plaintiff alleging libel or defamation must ordinarily

establish five elements: (1) that the defendant published or disseminated a statement; (2) of and

concerning the plaintiff; that was both (3) defamatory, and (4) false; and (5) either caused

economic loss, or is actionable without proof of economic loss. Stanton v. Metro Corp., 438 F.3d

119, 124 (1st Cir. 2006) (citing White v. Blue Cross & Blue Shield of Mass., Inc., 442 Mass. 64,

809 N.E.2d 1034, 1036 (Mass. 2004)); Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142

F.3d 26, 42 (1st Cir. 2006) (quoting McAvoy v. Shufrin, 401 Mass. 593, 518 N.E.2d 513, 517

(Mass. 1988)). A statement is defamatory if it "may reasonably be read as discrediting [the

plaintiff] in the minds of any considerable and respectable class of the community." Disend v.

Meadowbrook Sch., 33 Mass. App. Ct. 674, 604 N.E.2d 54, 55 (Mass. App. Ct. 1992) (citing

Sharratt v. Housing Innovations, Inc., 365 Mass. 141, 310 N.E.2d 343, 346 (Mass. 1974));

18
accord White, 809 N.E.2d at 1036. Generally, under Massachusetts law, summary judgment for a

libel defendant is appropriate if "the publication is not reasonably capable of any defamatory

meaning, and cannot reasonably be understood in any defamatory sense." Sharratt, 310 N.E.2d

at 345 (quoting King v. Ne. Publ'g Co., 294 Mass. 369, 2 N.E.2d 486, 487 (Mass. 1936)); see

also Smith v. Suburban Rests. Inc., 374 Mass. 528, 373 N.E.2d 215, 217 (Mass. 1978)

("Inferences which might be drawn by a considerable and respectable segment of the community

can make a publication actionable."); Amtrak Prods., Inc. v. Morton, 410 F.3d 69, 72 (1st Cir.

2005) (in determining whether statement was defamatory, courts ask what a "reasonable reader"

would think upon reading it) (quoting Foley v. Lowell Sun Publ'g Co., 404 Mass. 9, 533 N.E.2d

196, 197 (Mass. 1989))

To state a claim for defamation, Plaintiffs must allege that "the defendant was at fault for

the publication of a false statement regarding the plaintiff, capable of damaging the plaintiff's

reputation in the community, which either caused economic loss or is actionable without proof of

economic loss." White v. Blue Cross & Blue Shield of Mass. Inc., 442 Mass. 64, 66 (2004);

Draghetti v. Chmielewski, 416 Mass. 808, 812 (1994) ("Defamation involves the unprivileged

publication to a third party of a false statement concerning another that exposes its subject to

ridicule or contempt"). The Complaint sufficiently alleges each of the required elements of

defamation.

B. The Complaint Properly Alleges That the Article is Capable of Damaging the
Plaintiffs' Reputations

19
A publication is defamatory when it tends to injure one's reputation in the community

and expose him to hatred, ridicule, and contempt. Brauer v. The Globe Newspaper Co., 351

Mass. 53, 55-56 (1966); White, 442 Mass. at 66 (question is whether communication is capable

of discrediting plaintiffs in the minds of any considerable, respectable class of the community).

Massachusetts courts have therefore found statements imputing criminal behavior actionable.

Shafir v. Steele, 431 Mass. 365, 373 (2000). Similarly, "words which cast aspersions upon a

businessman's or business corporation's honesty, credit or business character may be

actionable." Ricciardi v. Latif, 3 Mass. App. Ct. 714, 714-15 (1975) (falsely stating that plaintiff

refused to pay for defendant's products was capable of a defamatory meaning) .

The Complaint clearly alleges that the content published is capable of discrediting the

Plaintiffs in the minds of a considerable and respectable portion of the community. See Brauer,

351 Mass. at 55. Specifically, the Defendants have specifically stated that Fr. Lemelson may have

conducted a number of unethical, inappropriate, and/or illegal actions. The statements of the

Defendants imputes criminal behavior — i.e., "illegal actions" — to Fr. Lemelson and draws into

question his honesty, credit or business character. See id.; Ricciardi, 3 Mass. App. Ct. at 714-15.

Certainly, the Article and the Interview are sufficient to discredit the Plaintiffs in the minds of a

portion of the community. See id.

The Defendants have attributed the false reports in their Article to unnamed sources, and

in the televised Interview did not attribute their comments to any sources at all, stating them

instead as affirmatively true and factual. Repeating a false accusation is no defense to

defamation. It is well settled that "if words are defamatory their republisher may not avoid

liability by truthfully attributing them to someone else." Sanford v. Boston Herald-Traveler, 318

20
Mass. 156, 158 (1948), quoting Maloofv. Post Publishing Co., 306 Mass. 279, 280 (1940) ("It is

elementary law that a defendant cannot free himself from responsibility for spreading

defamation by stating that the charges were made by another, and not by the defendant")

(emphasis supplied). The republisher of a defamatory statement "is subject to liability as if he

had originally published it." Appleby v. Daily Hampshire Gazette, 395 Mass.32, 36 (1985).

In considering the effect of a publication, courts must consider not only the words

themselves, but the inferences which might be drawn by a considerable and respectable segment

of the community. See Mabardi v. Boston Herald-Traveler Corp., 347 Mass. 411, 413 (1964)

("it is not required that there be direct and explicit language tending to discredit the plaintiff . . .

Words, pictures or signs, singly or in combination, understood as mankind in general would

understand them, conveying such an imputation render the publication libelous"); Thayer v.

Worcester Post Co., 284 Mass. 160, 162 (1993) ("An insinuation may be as actionable as a

direct statement"). Similarly, courts have recognized that words, even when not actionable in

themselves, may imply the existence of undisclosed defamatory facts. See, e.g., Milkovich, 497

U.S. 1, 20-21 (1990) (recognizing that the connotation suggested by the article implied that

plaintiff had committed perjury, the insinuation of which was sufficient to state a claim for

defamation). This is consistent with SEC policies regarding confidentiality.

The Complaint adequately alleges that the content implies a defamatory meaning and

suggests the existence of undisclosed defamatory facts. By cobbling together selective facts, and

21
omitting hugely important other facts 19, the Defendants imply that Plaintiffs have engaged in

improper business practices. It can therefore not be said that the content of the article in general,

as well as the interviews on television is incapable of discrediting the Plaintiffs in the minds of a

considerable and respectable class of the community; the article, as well as headlines and tweets,

explicitly accuse the Plaintiffs of illegal, improper, and unethical acts. See Poland v. Post, 330

Mass. at 704 (question of whether a publication is defamatory will not be taken from jury unless

statement is not reasonably capable of being understood in a defamatory sense); see also Jones

v. Taibbi, 400 Mass. 786, 792 (1987) ("Where a communication is susceptible of both a

defamatory and nondefamatory meaning, a question of fact exists for the jury").

The Defendants may argue that they are immune from liability for the defamatory

content on their website based on certain conditional privileges. As an initial matter, although

Massachusetts law recognizes certain privileges to publish defamatory material, consideration

of these privileges requires the evaluation of materials outside the four-comers of the

Complaint. As such, the Defendants assertions are not properly considered now. See Chan v.

Immunetics Inc., 1999 WL 218490 (Mass. Super. 1999) (internal citations omitted)

(consideration of whether allegedly defamatory statements were privileged required review of

materials outside purview of Rule. That fact aside, the Complaint establishes that neither the

fair report nor the reputable news source privilege protects Bloomberg.

C. Actual Malice Can Be Inferred From The Allegations Contained In The Complaint.

19
In this case the defendants omitted the fact that Fr. Lemelson had explained that he was aware of an investigation
involving Ligand but was not the target of that investigation.

22
Massachusetts courts have not decided whether malice is an element of the tort, e.g.,

Dulgarian v. Stone, 420 Mass. 843, 652 N.E.2d 603, 609 & n.9 (Mass. 1995), but might require

it if faced with the issue again, see id. at 609 (quoting the Restatement (Second) of Torts § 623A

(1977), which provides the actual malice standard for injurious falsehood/product disparagement

actions).

In Rotkiewicz v. Sadowsky, 431 Mass. 748, 730 N.E.2d 282 (Mass. 2000),the Supreme

Judicial Court stated that "[i]n the context of defamation, the term 'actual malice' does not mean

the defendant's dislike of, hatred of, or ill will toward, the plaintiff," but rather whether the

defendant acted with knowledge of falsity or reckless disregard for whether a statement was true

or false. Id. at 289 (emphasis added). Based on this language, we had concluded that the public-

figure definition of actual malice applied throughout "the context of defamation." See also Richard

W. Bishop, 17A Mass. Practice § 43.6 n.5 (supporting this conclusion).

As currently pled, and consistent with the requirement that malice may be alleged

generally under Rule 9(b) of the Federal Rules of Civil Procedure, the allegations set forth in the

Complaint permit the Court to draw the reasonable inference that the Defendants are liable for

actual malice. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Because direct evidence of

actual malice is rare, it may be proved through inference, and circumstantial evidence.

Recklessness amounting to actual malice may be found where a publisher fabricates an account,

makes inherently improbable allegations, relies on a source where there is an obvious reason to

doubt its veracity, or deliberately ignores evidence that calls into question his published

statements.” Levesque v. Doocy, 560 F.3d 82, 90-91 (1st Cir. 2009) (internal citations omitted);

see also Schatz v. Republican State Leadership Comm., 669 F.3d 50, 58 (1st Cir. 2012) (to satisfy

Twombly and Iqbal, plaintiff need only “lay out enough facts from which malice might

23
reasonably be inferred”); Fox Entm't Grp., Inc. v. Abdel-Hafiz, 240 S.W.3d 524, 533 (Tex. App.

2007) (“Actual malice focuses on the defendant’s state of mind, particularly his attitude toward

the truth of what he reported, which a plaintiff can prove through objective evidence about the

publication’s circumstances and the defendant’s conduct at the time of publication.”); Petition of

Retailers Commercial Agency, Inc., 342 Mass. 515, 521, 174 N.E.2d 376, 380 (1961) (holding

that “if a defendant makes a report which he asserts to be true when he has no reasonable

grounds or probable cause for so doing, it could be found that he has not acted in good faith” and

that “[i]t has long been recognized that an absence of good faith may tend to prove ill will and

thus actual malice”); Wormwood v. Lee, 226 Mass. 339, 341, 115 N.E. 494 (1917) (“[i]n an

action for slander, upon proof that words in themselves actionable have been spoken, there is a

presumption of malice as an inference of law”).

In the defamation context, recklessness amounting to actual malice may be found where

the defendant relies on a source when there is an obvious reason to doubt its veracity or

deliberately ignores evidence that calls into question his published statements. In the defamation

context, malice is not a matter that requires particularity in pleading — like other states of mind,

it may be alleged generally. Fed. R. Civ. P. 9(b). Rule 9 merely excuses a party from pleading

states of mind under an elevated pleading standard

For recklessness, the evidence must permit the conclusion that he "in fact entertained

serious doubts as to the truth of his publication," St. Amant v. Thompson, 390 U.S. 727, 731, 88

S. Ct. 1323, 20 L. Ed. 2d 262 (1968).When a reporter is aware of an allegation's probable

inaccuracy, however, a deliberate intent to avoid the truth may be adequate to establish actual

malice. See id. at 731-732. When reporting allegations of a third party, "recklessness may be

24
found where there are obvious reasons to doubt the veracity of the informant or the accuracy of

his report." Id. at 732. A defendant cannot ensure a "favorable verdict by testifying that he

published with a belief that the statements were true." Id; Milgroom v. News Group Boston,

Inc., 412 Mass. 9 , 11 (1992). As a baseline proposition, the reviewing court must examine the

content of the statements, and the circumstances under which they were made, to see "whether

they are of a character which the principles of the First Amendment . . . protect." New York

Times Co. v. Sullivan, supra at 285.

. From these facts—which are explicitly alleged in the Complaint—the Court can

draw the reasonable inference that the Defendants have not acted in good faith and thus

with “actual malice.” Accordingly, for this reason alone, the Defendants motion to dismiss

must be denied.

. Plaintiff is not trying to “damper” Bloomberg’s “freedom of expression.” Fr. Lemelson

is only seeking recourse for the harm he has suffered from the libelous statements. Without any

substantiation, the Defendants repeatedly and recklessly claimed that Fr. Lemelson was

unethical. This is not speech protected by the First Amendment. This is defamation. See, e.g.,

Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 773 (1986) (“‘The need to avoid self-

censorship by the news media is ..., not the only societal value at issue ... [or] this Court would

have embraced long ago the view that publishers and broadcasters enjoy an unconditional and

indefeasible immunity from liability for defamation.’ Any analysis must also take into account

the ‘legitimate state interest underlying the law of libel [in] the compensation of individuals for

the harm inflicted on them by defamatory falsehood.’”) (internal citations omitted).

25
C. The Complaint Properly Alleges Falsity

The Complaint sufficiently pleads that the Article and Interview is false. Specifically, the

Plaintiffs did not engage in a number of unethical, inappropriate, and /or illegal actions. The

defendant cannot escape liability by "truthfully attributing [defamatory words] to someone else."

See Jones v. Taibbi, 400 Mass. at 792. Instead, the Complaint adequately alleges the falsity of

the article and television interview, based on the totality of its content, and the implication that

Plaintiffs engaged in improper and immoral activities. The Complaint undeniably asserts that the

Defendants’ treatment of Fr. Lemelson is motivated by malice and an intent to discredit him. The

Complaint's allegations of falsity, coupled with the allegations of ill will and animus on the part

of the Defendants toward Plaintiffs, alleged sufficient facts to state a claim for defamation.

D. The Complaint Properly Alleges Fault.

In Massachusetts, a private figure need only prove that the defendant acted with

negligence in publishing a false statement. See. e.g., Schrottman v. Barnicle, 386 Mass. 627,

630 (1982). The Supreme Court explained this characterization in Gertz v. Robert Welch Inc.,

reasoning that when "an individual voluntarily injects himself or is drawn into a particular public

controversy, [she] thereby becomes a public figure for a limited range of issues." 418 U.S. at

351-52 (emphasis supplied); see also Mateira v. Huff, 394 Mass. 328, 331 (1985).

Whether an individual is a limited issue public figure is determined by whether (1) there

is a public controversy; (2) the plaintiff played a sufficiently central role in controversy; and (3)

the alleged defamatory statement was germane to plaintiff's participation in the controversy.

Gertz, 418 U.S. at 351-52. Where the defamatory statements meet these criteria, a plaintiff must

26
show that the defendant acted with "actual malice" in publishing the statements. It should be

noted that "actual malice" here has a different meaning than under G.L. c. 231, discussed with

regard to falsity above. Here, a statement is published with "actual malice" if it is published with

knowledge that it is false or with reckless disregard for its truth or falsity. New York Times Co. v.

Sullivan, 376 U.S. 254, 280 (1964).

Plaintiff ‘s counsel acknowledges the Fr. Lemelson has been interviewed by many media

outlets and publishes his opinions about financial and moral issues. The Defendants, however,

ignore the limits of this status. Specifically, the premise of being a "limited issue" public figure

is, just as it says, designed to limit the range of topics about which defamatory content is

protected. See 418 U.S.at 351-52; see also Mateira, 394 Mass. at 330 (it is a function of the jury

to determine whether the plaintiff is a public figure unless facts bearing on the issue are

uncontested). Moreover, there is no evidence that Fr. Lemelson has voluntarily inserted himself

into a public controversy which would result in enforcement action by the SEC. See Gertz, 418

U.S. at 351-52. As such, the Defendants characterization of Fr. Lemelson as a public figure,

even for a limited issue, is unsupportable. Under such an interpretation, a plaintiff could never

succeed on a claim for libel, rising and falling as such claims often do, on the fact that

defamatory statements were published by the media. The law is clear that "[a] private individual

is not automatically transformed into a public figure just by becoming involved in or associated

with a matter that attracts public attention." Jones v. Tabibbi, 400 Mass. at 798, quoting Wolston

v. Reader's Digest Ass'n, 443 U.S. at 167.

Consequently, for purposes of the defamatory content at issue, the Plaintiffs are all

private figures, the fault standard for which requires only that Plaintiffs show that the

Defendants acted negligently in publishing defamatory statements. See Schrottman, 386

27
Mass. at 630. Nevertheless, in light of the circumstances, including inter alia, the inherent

unreliability of the statements, the passage of time since its issuance, and the developments in

the case, throughout which time the Defendants have continued to publish the defamatory

content, the Complaint alleges that the Defendants were not merely negligent but, at best,

extremely reckless in failing to properly investigate. See. e.g., Friedman v. Boston

Broadcasters Inc., 402 Mass. at 381-82 (issue of material fact whether broadcaster made

sufficient investigation of plaintiff's records before broadcasting defamatory falsehood, where

records tended to refute or undercut key facts reported in news story). The Complaint

adequately alleges a level of fault in excess of that required in light of Plaintiffs' status as

private figures.

II. PLAINTIFFS’ COMMERCIAL DISPARAGEMENT CLAIM SHOULD NOT BE
DISMISSED.

The elements of a commercial disparagement claim under Massachusetts law are that the

defendants: “(1) published a false statement to a person other than the plaintiff; (2) ‘of and

concerning’ the plaintiff’s products or services; (3) with knowledge of the statement’s falsity or

with reckless disregard of its truth or falsity; (4) where pecuniary harm to the plaintiff’s interests

was intended or foreseeable; and (5) such publication resulted in special damages in the form of

pecuniary loss.” HipSaver, Inc. v. Kiel, 464 Mass. 517, 523 (2013).

The Courts have recognized that §§ 766 and 766B of the Restatement (Second) of Torts

reflect the law of Massachusetts. See United Truck Leasing Corp. v. Geltman, 406 Mass. 811,

816 (1990); Restatement (Second) of Torts § 766 comment c & § 766B comment b (1979)

(historical development of the torts). Restatement (Second) of Torts at § 766A, provides:

28
"One who intentionally and improperly interferes with the performance of a contract (except a

contract to marry) between another and a third person, by preventing the other from performing

the contract or causing his performance to be more expensive or burdensome, is subject to

liability to the other for the pecuniary loss resulting to him."

Honesty and integrity is a vital part of both Fr. Lemelson’s vocation as a Priest and also

his lay vocation as a fund manager. It was foreseeable by the Defendants that when it made

unsubstantiated charges in a credible, widely distributed publication the inevitable consequence

toward the Plaintiffs would be negative. See e.g., Callis, Papa, Jensen, Jackstadt & Halloran,

P.C. v. Norfolk S. Corp., 292 Ill. App. 3d 1003, 1009 (1997); MLI Indus., Inc. v. New York State

Urban Dev. Corp., 205 A.D. 2d 998, 999 (N.Y. 1994); Westfield Dev. Co. v. Rifle Inv. Assocs.,

786 P.2d 1112, 1117-1118 (Colo. 1990). See also Restatement (Second) of Torts, supra at §

766A comment b (this tort is "now consistently recognized"). Shafir v. Steele, 727 N.E.2d 1140,

431 Mass. 365 370-371 (Mass., 2000)

In addition, as discussed above, the Plaintiffs have plausibly alleged actual malice.

Plaintiffs’ commercial disparagement claim should therefore not be dismissed.

III. PLAINTIFFS’ NEGLIGENCE CLAIM SHOULD NOT BE DISMISSED.

Under the First Amendment and well-settled Supreme Court precedent, Bloomberg can be

held liable for publishing a defamatory statement if it did so with actual malice. See Gertz, 418

U.S. at 342; Time, Inc. v. Hill, 385 U.S. 374, 397 (1967). One who publishes a false and

defamatory communication concerning a private person, or concerning a public official or a public

figure in relation to a private matter, is subject to liability, if, but only if, he (a) knows that the

statement is false and that it defames the other, (b) acts in reckless disregard of these matters, or

(c) acts negligently in failing to ascertain them.

29
The level of fault required varies between negligence (for statements concerning private

persons) and actual malice (for statements concerning public officials and public figures).”

Ravnikar v. Bogojavlensky, 438 Mass. 627, 630, 782 N.E.2d 508 (2003). Grant v. Target Corp.,

126 F.Supp.3d 183 (D. Mass., 2015)

The Defendants’ failure to ascertain the truthfulness of the article before publishing

establishes the necessary element of negligence and lack of care. Under the above-referenced

standards, this count should not be dismissed.

IV. PLAINTIFFS’ CLAIM FOR INTENTIONAL INTERFERENCE WITH
PROSPECTIVE ECONOMIC ADVANTAGE SHOULD NOT BE DISMISSED.

To plead a claim for intentional interference with prospective economic advantage,

Plaintiffs must allege that (1) they had an advantageous relationship with a third party;

(2) Defendants knowingly induced a breaking of the relationship; (3) Defendants’ interference

with the relationship, in addition to being intentional, was improper in motive or means; and

(4) Plaintiffs were harmed by the Defendants’ actions. See Blackstone v. Cashman, 448 Mass.

255, 260 (2007). See Dulgarian v. Stone, 420 Mass. 843, 850 (1995) (dismissing claims for

intentional interference with business relations because there was no indication that the report

about plaintiff’s business practices was made “for any reason other than the reporting on an

issue of public concern”).

The Complaint meets its legal burden by referencing specific advantageous relationships

that have been lost because of the Article and Interview. The Defendants call Fr. Lemelson’s

lost business “speculative” and “unspecific”. The Plaintiffs have defined the harm specifically

and have met their burden in this phase of litigation to pleading harm. See Singh v. Blue

Cross/Blue Shield of Mass., Inc., 308 F.3d 25, 48 (1st Cir. 2002) (stating that a plaintiff “may

30
not speculate about future business relationships” when alleging tortious interference with

business advantage); Sherman v. Clear Channel Outdoor, Inc., 88 F. Supp. 2d 168, 177 (D.

Mass. 2012) (dismissing claim for tortious interference with advantageous relationship because

plaintiff “has failed to allege that a specific business relationship existed . . . which would

support this claim”).

The Plaintiffs have alleged that specific business and professional relationships have

been affected by the Article and Interview. Bloomberg is a world-wide leader in the production

and distribution of news. It would be hard to imagine that publishing a story that a hedge fund

manager was being investigated for manipulating markets would not harm the Plaintiffs 20. The

Plaintiffs have sufficiently plead that its advantageous relationships have been harmed by

publishing the Article and Interview. See Blackstone, 448 Mass. at 260. The Article and

Interview were false and defamatory. Bloomberg’s actions meet the definition of malice and

therefore are not protected by the First Amendment. See Gertz, 418 U.S. at 342.

V. AS NECESSARY, THE PLAINTIFFS SHOULD BE GRANTED LEAVE TO
AMEND

When a motion to amend is entered before formal entry of judgment, the district court

should evaluate the motion under the liberal standard of Rule 15(a). Torres–Alamo v. Puerto

Rico, 502 F.3d 20, 25–26 (1st Cir.2007) (citing Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st

Cir.2006)). Under this standard, “[a]mendments may be permitted prejudgment, even after a

dismissal for failure to state a claim, and leave to amend is ‘freely given when justice so

20
A common-sense test can be applied here. Imagine any prospective investor of Lemelson Capital googling
Lemelson Capital or Emmanuel Lemelson, finding the number two search results to be the Bloomberg article,
behind only Wikipedia, and still deciding to move forward with an investment in one of Lemelson Capital’s funds.

31
requires.’ Id.

CONCLUSION

Under Massachusetts law, a plaintiff alleging defamation must ordinarily establish five

elements: (1) that the defendant published or wrote a written statement; (2) of and concerning the

plaintiff; that was both (3) defamatory, and (4) false; and (5) either caused economic loss, or is

actionable without proof of economic loss. A statement is defamatory if it may reasonably be read

as discrediting the plaintiff in the minds of any considerable and respectable class of the

community.

The Article and Interview are examples of “fake news,” a phenomenon which has

increasingly contaminated public discourse and affected our ability, as citizens, to make informed

decisions about our country and unfairly and indiscriminately target reputable and honest persons

like Fr. Lemelson. Ray Dalio, a famous investor and target of a story by the same person who

authored the Wall Street Journal article (which was referenced in Defendants’ motion) about Fr.

Lemelson, has an excellent explanation of how the impact of “fake news” unfairly tarnishes

reputations (“Plaintiffs’ Response- Exhibit C”).

The Plaintiffs have clearly met their legal burden regarding all Counts of their Complaint.

The comments made on television and details within the article, taken as a whole, are clearly

defamatory. It is also likely, given recent events, that Ligand Pharmaceuticals is being actively

investigated by the SEC. Fr. Lemelson was simply expressing an honest opinion as an analyst. A

fair reading of the totality of the defamatory statements and characterizations of Fr. Lemelson and

Lemelson Capital portray Fr. Lemelson as being dishonest. The damage to Fr. Lemelson’s

reputation in his primary and secondary vocation, which have been alleged in the Complaint, have

not been remedied. The damage, according to SEC official guidance, is foreseeable. Generally,

32
case law disfavors dismissing complaints, including defamation complaints, at this early stage in

litigation. We respectively ask the Court to allow this case to proceed and dismiss the Defendants’

motion.

Submitted by :

/s/__Thomas R. Mason__/s/

Thomas Russell Mason, Esq.
Law Offices of Thomas Mason
BBO #553968
15 New England Executive Park
Burlington, MA 01803
(508) 923-9814
attytmason@gmail.com
Attorney for Plaintiffs.

February 13, 2017

CERTIFICATE OF SERVICE

I hereby certify that on February 13, 2017 I electronically filed the foregoing document
with the Clerk of Court through the CM/ECF system, and I hereby certify that I have served the
foregoing by United States mail on the below-listed counsel who has not yet entered an
appearance in this Court:

33
Robert A. Bertsche
PRINCE LOBEL TYE LLP
BBO #554333
One International Place, Suite 3700
Boston, MA 02110
(617) 456-8018

Jeffrey B. Korn
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, New York 10019-6099
(212) 728-8000

/s/Thomas R. Mason/s/

34