NYS Appellate Division Hands Defendants Setback In Lawsuit with Brummer and FINRA

October 22, 2020

Since 2015, the BrokeAndBroker.com Blog has reported about developments in an ongoing lawsuit involving allegations of defamation by Plaintiff Brummer against Defendant Wey and others. The nature of the ongoing civil case was characterized in part in Christopher Brummer, Plaintiff, v. Benjamin Wey, FNL Media LLC, and NYG Capital LLC d/b/a New York Global Group, Defendants (Order with Notice of Entry, Supreme Court of the State of New York/County of New York, No. 153583/2015 / March 14, 2016) http://brokeandbroker.com/PDF/BrummerOrder160314.pdf:

Plaintiff commenced this action on April 22, 2015, asserting three causes of action for defamation, defamation per se, and intentional infliction of emotional distress (Mot. Wipper Aff., Exh. A). Plaintiff, is a professor of law at Georgetown University Law Center and the sole African-American on the National Adjudicatory Council (NAC). He was part of a panel that upheld a decision by the Financial Industry Regulatory Authority. Inc. ("FINRA"), issuing a lifetime ban from the security industry against two African-American stockbrokers: non-parties William Scholander and Talman Harris. NYG Capital LLC d/b/a New York Global Group (hereinafter referred to individually as "NYGG") is a U.S. and Asia based strategic market entry advisory, venture capital, and private equity investment group that services clients worldwide. FNL Media, LLC. is described in the Complaint as a division or subsidiary of NYGG, and the owner of TheBlot, a website and online digital magazine that claims to combine investigative journalism with reader-submitted opinions. According to the Complaint Benjamin Wey is the CEO of NYGG. a publisher and contributor to TheBlot (Mot. Wipper Aff., Exh. A). 

The Complaint alleges that almost a month after the NAC panel wrote the decision upholding the FINRA lifetime ban on non-parties William Scholander and Talman Harris. TheBlot. an on-line magazine. began publishing a series of articles defaming the plaintiff. The articles are described by plaintiff as falsely characterizing him as a "racist," an "Uncle Tom," as having an affair with a married woman, as being under investigation and implicated in fraud. Plaintiff also alleges that the defendants posted comments under a false identity and altered photographs of the plaintiff. Plaintiff claims that he is a private individual that had an excellent professional and personal reputation which has been damaged by the defendants' defamatory statements that resulted in the loss of work together with other damages (Mot. Wipper Aff .. Exh. A). 

Readers are urged to consider: 
(BrokeAndBroker.com Blog, April 9, 2018) 

2020 NYS Supreme Court Motions

The Defendants in Brummer moved to compel production by non-party FINRA of 33 documents, which both Plaintiff and FINRA claim are protected per CPLR 3101(c) as attorney work product or per CPLR 3101(d)(2) as material prepared in anticipation of litigation. Christopher Brummer, Plaintiff, v. Benjamin Wey, FNL Media LLC, and NYG Capital LLC d/b/a New York Global Group, Defendants (Decision and Order, NYS Supreme Court, 153583/2015) (the "January 2020 Decision/Order") http://brokeandbroker.com/PDF/BrummerNYSOrder200128.pdf
Further, FINRA characterizes eight of the withheld documents pertaining to "mitigation of litigation risks arising out of public statements concerning anticipated litigation."

SIDE BAR: New York State Civil Practice Law and Rules ("CPLR") Rule 3101: Scope of Disclosure:
. . .

(c) Attorney's work product. The work product of an attorney shall not be obtainable.

(d) Trial preparation.
. . .
2.  Materials. Subject to the provisions  of paragraph one of this subdivision, materials otherwise discoverable under subdivision (a) of  this  section and prepared in anticipation of litigation or for trial by or for another party, or by or for  that  other  party's  representative (including  an  attorney,  consultant,  surety,  indemnitor,  insurer or  agent), may be obtained only upon  a  showing  that  the  party  seeking  discovery  has  substantial  need of the materials in the preparation of  the case and is unable without undue hardship to obtain the  substantial  equivalent of the materials by other means. In ordering discovery of the  materials  when  the  required  showing  has  been made, the court shall protect against  disclosure of the mental impressions,  conclusions,  opinions  or  legal theories of an attorney or other representative of a  party concerning the litigation.

Pursuant to the NYS Supreme Court's analysis in the January 2020 Decision/Order:

An in camera review of the documents reveals that they are first and foremost proposed strategies by a public relations firm APCO Worldwide and comments by plaintiff and FINRA on those strategies, for plaintiff and FINRA to counteract and thus mitigate damages from the defamatory statements concerning plaintiff on the internet, about which he sues. That defamation, not this litigation or its anticipated commencement, prompted this public relations campaign. Depending on defendants' future conduct, APCO Worldwide proposed as part of the campaign the creation of a new, readily searchable online text and images positively portraying plaintiff, unrelated to the litigation.

Page 2 of the January 2020 Decision/Order

The NYS Supreme Court does not discern any attorney work product among FINRA's documents at issue because the materials were not "communications by attorneys that are the product of their legal training or skills or that reflect any legal research, analysis, theory, strategy, or conclusion." at page 3 of the January 2020 Decision/Order. Similarly, the NYS Supreme Court declined to protect the documents under cover of materials primarily prepared for litigation. Accordingly, in part, the NYS Supreme Court granted Defendants' Motion to Compel FINRA to produce the 33 documents listed on its privilege log. To some extent, FINRA and Plaintiff Brummer found themselves hoisted with their own petard as the NYS Supreme Court found in part that:

[D]efendants are entitled to this relevant information regarding plaintiff's efforts to mitigate the past and future effects of the claimed defamation and any communications that might reveal the impact of the defamation on plaintiff's reputation and his mental and emotional condition, whether minimal or severe . . ." 

Pages 4 - 5 of the January 2020 Decision/Order

October 2020 Appellate Division Reversals

On appeal, Christopher Brummer, Plaintiff, v. Benjamin Wey, FNL Media LLC, and NYG Capital LLC d/b/a New York Global Group, Defendants/Respondents - and - Financial Industry Regulatory Authority, Inc., Non-Party-Appellant (Decision and Order, New York State Supreme Court/Appellate Division for the First Department,  Index No. 153583/15; Appeal No. 12135-12136N-12136NA; Case No. 2020-1794, 2020-00882 / October 20, 2020), the New York State Supreme Court/Appellate Division for the First Department ("Appellate Division") reversed the New York Supreme Court's:
  • granting of Defendants' Motion to Quash the nonparty subpoena to Verizon Online LLC, and 
  • granting to Defendants a protective order;
  • denial of Plaintiff Brummer's Motion for Leave to File a Second Amended Complaint; and
  • granting of Defendants' Motion to Compel.
As set forth in part in the Appellate Division Decision/Order:

Leave to amend a complaint should be freely given absent prejudice or surprise so long as the proposed claims are not palpably insufficient or devoid of merit (see McGhee v Odell, 96 AD3d 449, 450 [1st Dept 2012]; CPLR 3025[b]). Here, the court should have granted plaintiff leave to file the second amended complaint to include the subsequent allegations of defamation (Gottwald v Sebert, 172 AD3d 445 [1st Dept 2019]; Pickholz v First Boston, 202 AD2d 277 [1st Dept 1994]). Further, the allegations of intentional infliction of emotional distress alleged in the proposed second amended complaint are "governed by the continuing tort doctrine, permitting the plaintiff to rely on wrongful conduct occurring more than one year" prior to seeking leave to amend (Shannon v MTA Metro-N. R.R., 269 AD2d 218, 219 [1st Dept 2000]; see Estreicher v Oner, 148 AD3d 867, 867-868 [2d Dept 2017]). The court improvidently exercised its discretion in denying leave to amend insofar as plaintiff sought to allege claims for assault and battery, which show the scope of defendants' alleged harassment and, as such, are inextricably interrelated to the intentional infliction of emotional distress claim.

The information subpoena from nonparty Verizon Online LLC by plaintiff was not "utterly irrelevant" or obviously futile (Matter of Kapon v Koch, 23 NY3d 32, 34 [2014]). In any event, the time period for which plaintiff sought the information is directly relevant to the updated allegations in the second amended complaint.

We reject defendants' argument that the stipulation between them and FINRA compelled the latter to disclose records containing direct communications between it and plaintiff. Pursuant to the plain meaning of the stipulation, FINRA agreed only to produce communications between and among itself and other third parties to this litigation regarding plaintiff or the individual defendant. Since plaintiff is a party, direct communications with him are not covered.