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Lemelson v. Bloomberg L.P.

United States Court of Appeals, First Circuit

August 30, 2018

BLOOMBERG L.P.; MATTHEW ROBINSON, as an individual and as an agent of Bloomberg L.P.; JESSE WESTBROOK, as an individual and as an agent of Bloomberg L.P., Defendants, Appellees.


          Thomas R. Mason and Law Offices of Thomas Mason on brief for appellants.

          Robert A. Bertsche, Prince Lobel Tye LLP, Jeffrey B. Korn, Jonathan D. Waisnor, and Willkie, Farr & Gallagher LLP, on brief for appellees.

          Before Torruella, Lynch, and Kayatta, Circuit Judges.


         In both an online article and a subsequent TV interview, Bloomberg News reported that the Securities and Exchange Commission had opened an investigation to determine whether Emmanuel Lemelson, a priest and hedge fund manager, had intentionally published false material about public companies in whose stock he held a short position. Lemelson filed suit against Bloomberg and the article's authors, claiming that the report renders Bloomberg liable for several common-law torts, including defamation. The district court disposed of Lemelson's suit on defendants' motion to dismiss. It concluded that Lemelson's activities made him at least a limited-purpose public figure -- if not a full-fledged public figure -- thus requiring Lemelson to allege facts making it plausible that Bloomberg acted with actual malice in reporting about Lemelson. After concluding that Lemelson had failed to allege such facts, the district court dismissed his suit. Lemelson now appeals. For the following reasons, we affirm.


         Because this suit comes to us on appeal from the district court's dismissal for failure to state a claim, we draw the facts from the complaint. See González v. Vélez, 864 F.3d 45, 48 (1st Cir. 2017). In this posture, we also consider the "implications from documents attached to or fairly incorporated into the complaint," as well as "facts susceptible to judicial notice" and "concessions in plaintiff's response to the motion to dismiss." Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55-56 (1st Cir. 2012) (internal quotation marks omitted).

         According to his complaint, Emmanuel Lemelson is a "world-renowned priest [and] religious leader" in the Greek Orthodox Church. In his career outside of the church, Lemelson manages a hedge fund. He has become a "financial expert, philanthropist, humanitarian, and entrepreneur." Lemelson serves as the Chief Investment Officer of Lemelson Capital, LLC -- a firm that manages investment funds -- which, in turn, launched and manages a fund called Amvona. Lemelson also authors a blog that discusses, among other things, religion and finance. In his capacity as a commentator, he "has been interviewed by many international media outlets."

         On March 17, 2016, Matthew Robinson, a reporter for Bloomberg News, called Lemelson for an interview. Robinson related to Lemelson the outline of a story he was writing: The SEC was looking into whether Lemelson had bet against publicly traded companies then published false statements in the hope of driving down the stock price. Robinson sought Lemelson's comment. Lemelson denied that he or his firm was the subject of an SEC investigation, but did report knowing of an SEC investigation into Ligand Pharmaceuticals, a publicly traded company about which Lemelson had publicly written. As recited in the complaint, Robinson responded to Lemelson's denial by stating, "[W]ell, I'm going to write that you are being investigated anyway."

         Later that day, Robinson followed up with an email. He laid out in more detail the elements of the story he planned to write and the specific allegations against Lemelson, and again asked for comment. The next morning, Robinson left a voicemail to the same effect and also informed Lemelson that Bloomberg planned to go to print imminently. Shortly thereafter, Robinson sent another email, reiterating his request that Lemelson "please get back to [him] as soon as possible." Beyond the first phone call, Lemelson does not appear to have responded to any of Robinson's communications.

         On March 18, 2016, Bloomberg published the article. Titled "Hedge Fund Priest's Trades Probed by Wall Street Cop," it reported that the SEC was investigating Lemelson for stock manipulation. According to the article, the SEC was examining information Lemelson published about a variety of companies, including Ligand Pharmaceuticals, World Wrestling Entertainment, and Sketchers. The SEC sought to determine whether he had run afoul of securities laws by knowingly publishing false information about companies his firm had shorted. As we have previously explained, "'[s]hort selling' is a transaction in which an investor borrows shares of stock, sells them, and later buys an equivalent amount of shares to return the borrowed shares." Howard v. Antilla, 294 F.3d 244, 246 (1st Cir. 2002). Thus, the "potential for profit in short selling lies in the possibility that the stock price will decline between the time the short seller sells the borrowed stock and the time he must purchase replacement shares to repay the borrowed stock." Id. In one instance, the article reported, shares of Ligand Pharmaceuticals dropped seven percent after Lemelson posted on his blog that demand for one of Ligand's drugs was rapidly declining and that the company faced the imminent risk of declaring bankruptcy. Lemelson does not dispute that his firm held a short position in Ligand.

         The article did not name a source, but attributed its information to "people with knowledge of the matter," stating that "Ryan White, an SEC spokesman, declined to comment." The article also noted that Lemelson "hasn't been accused of wrongdoing" and that the investigation was but a "preliminary step."

         After publication, Lemelson requested that Bloomberg retract its story. He sent Jesse Westbrook, Robinson's editor, a press release denying the existence of an investigation or any conduct that could be the basis of that investigation. Bloomberg did not retract the article, but did update its content with a quotation from Lemelson's press release. In a TV interview on Bloomberg's news channel that aired ...

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