Summary: Scottsdale Capital Advisors settled their lawsuit against me (link is to settlement), I don’t pay them and they don’t pay me, everyone pays their own lawyers, and my blog posts remain unchanged.
It has been over two years since I first received a demand letter (dated 12 September 2017) from Charles Harder (destroyer of Gawker and personal defamation lawyer to President Trump) on behalf of his clients John Hurry and Scottsdale Capital Advisors (SCA). (See the demand letter on page 177 of my answer to the 3rd amended complaint.) SCA was the sole plaintiff in the eventual lawsuit against me and my company MorningLightMountain LLC. I have posted the full court docket as well as almost all the documents in the case in a post on my blog that I kept updated as the case progressed. The demand letter as well as the lawsuit that eventually came alleged that I had defamed SCA in four sentences across two blog posts.
The original complaint was filed on 4/16/2018; it lacked a copy of the allegedly defamatory blog posts and was quickly followed by the 1st amended complaint on 4/20/2018. That complaint alleged that four statements across two blog posts defamed SCA and were a false light invasion of privacy. My attorney filed to remove the case to federal court on 5/11/2018; by agreement of both parties the case was remanded back to Michigan state court (Kalamazoo County Circuit Court) on 5/29/2018. I filed an answer to the complaint and a motion for summary disposition on 6/7/2018. On 8/17/2018 SCA filed its response in opposition to the motion for summary disposition. My attorney filed a reply in support of the motion for summary disposition on 8/20/2019.
At the hearing on the motion for summary disposition of the 1st amended complaint on 8/22/2018, Judge Alexander C. Lipsey dismissed the complaint’s defamation allegations with respect to three of the statements (#1, #3, and #4) because he found that they were not adequately pleaded. He dismissed all the false light allegations because “Plaintiff Corporation would have no expectation of privacy.” See his opinion (published 10/4/2018) and the transcript of the hearing.
SCA filed a second amended complaint on 11/13/2018. This complaint only alleged that two statements in one blog post were defamatory (statements #1 and #2). My attorney filed an answer to that complaint and a motion for summary disposition (see brief supporting that motion) on 11/15/2018. On 12/3/2018 SCA filed its response in opposition to the motion for summary disposition. On 12/10/2018 my attorney filed a reply in support of the motion for summary disposition. Oral argument on the motion was heard on 12/14/2018 by Judge Lipsey. See the transcript (there was no separate order). Judge Lipsey dismissed the complaint for failure to state a claim while giving SCA an opportunity to file an amended complaint. (Note: The transcript incorrectly attributes Mr. Pinsky’s statements to Mr. Richotte on page 14 lines 11-16.)
On 1/11/2019 SCA filed its third amended complaint. This complaint alleged only one false and defamatory statement (statement #1). On 2/1/2019 my attorney filed my answer, motion for summary disposition, and a brief in support of the motion. On 3/20/2019 SCA filed its response in opposition to the motion for summary disposition. My attorney filed a reply in support of summary disposition on 3/22/2019.
The motion for summary disposition was heard by Judge Lipsey on 3/26/2019 (see transcript) and an order was issued denying the motion on 4/4/2019. At the hearing after Judge Lipsey announced his decision my attorney (Joseph Richotte) asked for a stay of the case pending appeal of the decision. Judge Lipsey granted the motion (transcript, pages 32-34).
Because Judge Lipsey’s decision was not a final decision (one that would normally end the case), I did not have the right to appeal — I had to ask the court for permission (leave) to appeal to the Michigan Court of Appeals. My attorney filed the application for leave to appeal on 4/25/219 (>1000 page pdf file). SCA filed its answer to the application for leave to appeal on 5/16/2019 and also filed a motion to strike on the same day. On 5/23/2019 my attorney filed an answer to the motion to strike and on 6/6/2019 he filed a reply to the answer to the application for leave to appeal.
On 9/13/2019 a panel of three judges from the Michigan Court of Appeals approved the application for leave to appeal and denied SCA’s motion to strike. My attorney filed the appeal brief on 11/8/2019. Following that the parties stipulated to extending the time for SCA to file its appeal brief and then discussed and reached a settlement. On 1/6/2020 the settlement was signed. The appeal was dismissed by stipulation on 1/10/2020. The lawsuit at the Kalamazoo County Circuit Court was dismissed by stipulation with prejudice on 1/16/2020.
There is no confidentiality clause in the settlement agreement so I uploaded it for everyone to read. The short summary of the agreement: SCA dropped all claims against me and my company MorningLightMountain LLC and I and my company agreed to give up the right to counter-sue (and any other potential claims I might have had). The lawsuit is dismissed, the blog posts stay as they are, nobody issues any apology, and everyone pays their own legal fees. I consider this to be a victory. Michigan does not have an anti-SLAPP law so even if I had won the appeal I believe it is very unlikely that I would have won any attorney fees.
Why did I fight this lawsuit in the first place? The logical choice for me would have been to accede to the initial demand letter. However, I did not believe I wrote anything untrue in my posts, and I came to realize that anyone can threaten litigation to force rewrites of unflattering coverage. This did not rest well with me so I resolved to fight the lawsuit.
Perhaps more importantly, I believed that caving to a demand to remove unfavorable coverage would make it more likely for others to use threats (both legal and physical) to get me to remove negative coverage. After all, this is not the first threat I have received for my blogging nor the most troubling. (The most troubling was six years ago, when I received a threat to kill my wife and daughter for calling out a trader for market manipulation.) I have written a lot about stock promotion, manipulation, and other ethically dubious behavior in microcap markets over the 15 years I have been blogging. Threats of various sorts are expected. If I were to cave to demands to remove truthful but unflattering posts then this blog would be a lot less useful.
I care about accuracy and my goal in blogging is to write useful, interesting, and–most importantly–true articles. No matter what, I am always open to being corrected when I am wrong. But I will not remove true and useful information just because it makes someone angry.
Where have all the lawyers gone?
In 2018 Charles Harder’s law firm (Harder Mirell & Abrams LLP) lost its two other name partners, Douglas Mirell and Jeffrey Abrams. Mirell did not have glowing words for the business: “I found myself increasingly uncomfortable with the docket of matters we were handling … They seemed irreconcilable with my core commitment to the defense of the First Amendment.” Jeffrey Abrams retired from the practice of law at the end of 2018, saying he would be “co-founding a new venture in the financial industry.” Abrams did have positive words about Harder, saying “I wish Charles Harder, my partner of six years, and longtime friend, all the best in his growing practice, and look forward to referring colleagues and friends to HARDER LLP in the future when they need help protecting their reputations.” At some point in 2018 the firm changed its name to Harder LLP.
Lawyers directly involved in the case left firms as well. Nicholas A. Kurtz, who argued for SCA at the hearing on the motion to dismiss the first amended complaint, left the firm shortly thereafter, becoming partner and founding a new Chicago office for Dunlap Bennett & Ludwig. H. Rhett Pinsky, who was the local (Michigan) lawyer for SCA and argued the motion for summary disposition of the second amended complaint for them, remains at his firm Pinsky, Smith, Fayette, and Kennedy, LLP. Margo Arnold, who argued the motion for summary disposition of the third amended complaint for SCA, remains at Harder LLP.
Jordan Susman, lead counsel for SCA in the case, left Harder LLP at the end of 2019 to become a partner at Nolan Heimann LLP. Andrew M. Friedman, who initially worked with me after I received the demand letter, left Butzel Long prior to the suit actually being filed. After a brief stent at Shulman Rogers he joined FINRA as a primary counsel of FINRA Enforcement in May 2019. Robin Luce-Herrmann remains the head of the media law group at Butzel Long. Joseph Richotte, who was lead counsel for me, remains at Butzel Long. Doaa Al-Howaishy, who assisted Richotte, left Butzel Long in 2019 to become an Asssistant Prosecuting Attorney in Wayne County, Michigan (in Detroit).
I will not stop writing about penny stocks. Scottsdale Capital Advisors and parties related to them, such as sister company Alpine Securities, and John Hurry and Justine Hurry (who are beneficiaries of the trusts that own the companies) are newsworthy. SCA itself stated that “only a handful of firms are still willing and able to process and clear sales of microcap securities…” (That is from a complaint SCA filed against FINRA in December 2018–see docket). FINRA won a quick dismissal of that lawsuit (read memorandum opinion), although that has been appealed by SCA. Also, according to the National Securities Clearing Corporation (NSCC), Alpine Securities was the clearing broker responsible for the majority (61%) of deposits of subpenny stocks in 2017. I think those are very good reasons why SCA and Alpine Securities are newsworthy.
SCA and Alpine Securities each have one big regulatory action pending that should be resolved soon. The SEC commissioners should reach a decision within 60 days on the SCA appeal to the SEC of the FINRA action against it that was the subject of my initial blog post . As for Alpine, its appeal of the SEC’s $12 million judgment (which was soon thereafter stayed pending appeal) against it will likely be heard by the US Court of Appeals for the Second Circuit the week of March 30th (per docket 100).