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John T. Reed’s summary judgment motion to end Russ Whitney’s federal case against Reed 1

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION

WHITNEY INFORMATION NETWORK, INC.
and RUSS WHITNEY, an individual,

Plaintiffs, Case No. 2:04-cv-00395-FTM-33DNF (LAG)

v.

JOHN T. REED, an individual,

Defendant.
_________________________________________/

DEFENDANT'S DISPOSITIVE MOTION FOR SUMMARY JUDGMENT

1. Pursuant to Federal Rule of Civil Procedure 56, Defendant JOHN T. REED (REED) hereby moves this Court for summary judgment with regard to all of Plaintiffs' claims. REED is entitled to judgment as a matter of law because there is no genuine issue as to any material fact necessary to grant such judgment.
ATTACK ON FREEDOM OF SPEECH AND THE PRESS
2. Since its inception, this litigation has been an attempt by Plaintiffs to silence an honest critic. The Court should dispose of attacks on free speech and freedom of the press at the earliest possible date. “…because of the intimidating effect of libel suits, determination as to the viability of the complaint should be made 'at the earliest possible stages.'” Andrews v. Stallings, 119 NM 478 (Cn. App. 1994)
3. REED is an author-publisher of a newsletter, books that cost $24 to $40, and a Web site about real estate investment and other subjects. Some of REED's writing consists of book reviews, seminar reviews, and investigative journalism. REED has criticized Plaintiffs in book reviews, seminar reviews, and investigative journalism articles at his Web site and in his newsletter. REED markets his newsletter and books only through his Web site www.johntreed.com.
4. Plaintiff RUSS WHITNEY (WHITNEY) is a convicted felon, get-rich-quick TV infomercial guru. The topics he covers include real estate investment. He primarily sells seminars and “mentoring” services that cost thousands of dollars. He is the majority owner, chief executive officer, and chairman of the board of Plaintiff WHITNEY INFORMATION NETWORK, INC. (WIN), a publicly-traded corporation. WHITNEY conducts his get-rich-quick activities primarily through WIN and its subsidiaries. Plaintiffs market their products and services primarily through TV infomercials, “free” come-on seminars in hotel meeting rooms, telemarketing, directs mail, their Web site www.russwhitney.com, and mass email.
PLAINTIFFS' POLICY OF USING ABUSE OF PROCESS TO SILENCE CRITICS
5. Starting in 2000, Plaintiffs ordered REED to remove all mention of Plaintiffs from his Web site. REED did not comply. Plaintiffs then began filing lawsuits against REED in a campaign of abuse of process.
6. In 2001, WHITNEY sent a telling email to another of his critics, the Creative Real Estate Online (http://www.creonline.com/) Web site. It said,
…I will see ALL POSTS regarding me and my company immediately removed from your site AND YOUR ARCHIVES. Terry, if that is not done immediately, starting TODAY, prepare to spend some money. I will institute a lawsuit against Creonline, you and all Creonline employees. I will also sue every poster on your board that has slandered my good name, in FEDERAL COURT on Monday morning. Count on it! Monday morning. Federal Court. Win or lose, you WILL be spend money from here on out for the illegal and slanderous use of my name.

7. Creonline, which is owned an operated by a married couple who are both lawyers, responded to WHITNEY's threats as follows:

Russ Whitney Discussion BANNED Here Under Threat of Lawsuit

As a result of threats by Russ Whitney to sue CRE Online, Terry Vaughan, J.P. Vaughan and our employees, for allowing discussions about him here on our "Infomercial Guru Forum," we are forced to ban any and all further discussion about Russ Whitney, his seminars or his organization.
Our attorneys have advised us that truth is an "absolute" defense to a defamation lawsuit, the Courts are not very fond of "prior restraints," and that it is highly unlikely that a "public figure" like Russ Whitney would prevail in such a lawsuit. However, we are a small company, and we simply cannot afford a protracted legal battle with a big, powerful organization like the Russ Whitney Company. Please respect our wishes and refrain from discussing Russ Whitney here. Thank you.
Sincerely, Terry and J.P. Vaughan

8. Unlike Creonline, REED did not back down in the face of repeated WHITNEY threats. Since then, the following WHITNEY-REED litigation events have ensued:
Date filed Court & Case # REED involvement
6/25/02 Fort Myers federal, 2:02-CV-388-FTM-29DNF REED sued
1/29/03 Broward County, FL, CACE 21-0301788 REED sued
2/12/03 Fort Lauderdale federal, 03-60195-CIV-MARRA REED sued
3/31/03 Miami federal, 03-60597-CIV-SEITZ REED sued
1/23/04 Fort Lauderdale federal, 04-CV-60101-MARRA REED subject of suit
6/23/04 San Francisco federal, CV04 0142-MISC-MHP REED subpoenaed
7/30/04 Lee County, FL, 04-CA-003045 REED sued
9/15/04 Fort Myers federal, 2:04-CV-462-FTM-29SPC REED subject of suit
9/21/04 Fort Myers federal, 2:04-CV-00395-FTM-33DNF REED sued

9. In a 5/20/04 email to REED, Plaintiffs' counsel Scott Rothstein said,
“Please allow this letter to serve as my formal request that you immediately remove all false data from your website and cease and desist from the illegal diversion of internet traffic using the Whitney name. Should you fail to comply, your inaction will be met with extremely severe legal consequences which will make what you are currently embroiled in look like a tea party.
I would respectfully suggest that you revisit your gameplan and throw in the towel. We are not going away until you remove all the false information from your website, cease your illegal diversion of internet traffic, and pay Mr. Whitney and his companies for all of the damage you have caused.
Please govern yourself accordingly.
As always, I remain,
Very truly yours,
Scott W. Rothstein”

10. At least one jurist who was drafted into WHITNEY's abuse-of-process campaign, Magistrate Judge Edward M. Chen of the Northern District of California, quickly saw through it. At the end of his second order quashing Plaintiffs' deposition subpoena of REED (Exhibit A), he said,
“The Court notes that Whitney's showing borders on violation of Rule 11(b) but the Court will not issue sanctions this time.”
11. The time has come to end Plaintiffs' abuse-of-process campaign against REED.
OSTENSIBLY THREE TYPES OF CLAIMS
12. The current Second Amended Complaint purports to have three types of claims:
o tortious interference with a business relationship
o defamation per se of a business reputation
o federal trademark infringement and related claims, namely, false designation of origin, false description, and false representation under 15 USC 1125(a) and common law trademark infringement
'TORTIOUS INTERFERENCE' CLAIM IS A SUBTERFUGE
13. Plaintiffs are falsely alleging “tortious interference” and trademark and related claims in an improper attempt to deny REED defenses available in public-figure publication libel cases. The Court can grant summary judgment in favor of Reed either by regarding the gravamen of all Plaintiffs' claims as libel or by treating the defamation claim and the gravamen of the “tortious interference” claim as libel and treating the trademark and related claims as Plaintiffs have labeled them. By either name, they are ripe for summary judgment in favor of REED.
PLAINTIFFS FAILED TO COMPLY WITH FLORIDA STATUTE 770.01
14. The Court should grant summary judgment on Plaintiffs' entire case on the grounds that Plaintiffs failed to give the specific written notice required by Florida Statute 770.01.
15. Florida Statute §770.01 says,
“Notice condition precedent to action or prosecution for libel or slander. --Before any civil action is brought for publication or broadcast, in a newspaper, periodical, or other medium, of a libel or slander, the plaintiff shall, at least 5 days before instituting such action, serve notice in writing on the defendant, specifying the article or broadcast and the statements therein which he or she alleges to be false and defamatory.”

16. Plaintiffs gave no specific written 770.01 notice before filing any of the claims asserted in the current Second Amended Complaint.
17. REED asserted Plaintiffs' failure to comply with the specific written notice requirements of Florida Statute 770.01 as an affirmative defense when he answered Plaintiffs' complaint. (Exhibit B ¶79)
18. Florida Statute 770.01 is a model of clarity and simplicity. Unlike the Times v. Sullivan line of Supreme Court decisions, it contains no mention of public figures or media or matters of public concern. Given its lack of ambiguity, it would appear that there has been little need for interpretation by the courts. There have been a number of such interpretations, however. Their message is that the statute means exactly what it says.
19. In [Mancini v. Personalized Air Conditioning & Heating, Inc., 702 So. 2d 1376 (Fla. 4th DCA 1997)] the court held that “[Florida Statute 770.01] created a condition precedent to a plaintiff's suit for libel, and failure to comply required dismissal of the complaint for failure to state a cause of action. A columnist for a local newspaper was entitled to the notice even though she worked full-time as an assistant state attorney and wrote a regular weekly column part-time for the local newspaper.”
20. The [Florida Statute 770.01] notice must be in writing and specify the specific statements alleged to be libelous. “…libel action which specified the article and attached a copy thereof without any specification as to the statements in the article alleged to be false and defamatory was insufficient under this section requiring notice to publisher of the article and the statements therein alleged to be false and defamatory.” Gannett Florida Corp. v. Montesano, App 1 dist. 308 So 2d 599 (1975) cert denied 317 So 2d 78 [Emphasis added]
21. Not only is failure to give 770.01 notice fatal to a libel claim, it is uncorrectable. “Generally, the plaintiff may not be permitted to cure the defect of nonexistence of a cause of action when suit was begun, by amendment of his pleadings to cover subsequently accruing rights. The statute providing that before any civil action is brought for publication…of a libel plaintiff must serve notice in writing on defendant was not satisfied where alleged notice was given subsequent to filing of suit.” Orlando Sports Stadium, Inc. v. Sentinel Star Company, 316 So. 2d 607
ALLEGING 'TORTIOUS INTERFERENCE' TO AVOID LIBEL DEFENSES
22. Calling libel “tortious interference” to avoid Florida Statute 770.01 notice requirements-or such other pertinent laws as the statue of limitations or the New York Times v. Sullivan line of cases-is an oft-tried, but thoroughly discredited, ploy.
23. “As stated by the court in Morrison v. National Broadcasting Company, 19 N.Y. 2d 453, 'We look for the reality, and the essence of the action not its mere name.' A contrary result might very well enable plaintiffs in libel to circumvent the notice requirements of Fla. Stat. 770.01 by the simple expedient of redescribing the libel action to fit a different category of intentional wrong.” Orlando Sports Stadium, Inc. v. Sentinel Star Company, 316 So. 2d 607
24. REED's writings about Plaintiffs are news gathering and publication. Plaintiffs are public figures. “We question whether this [tortious interference] cause of action could ever be stretched to cover a case involving news gathering and publication. In many ways, this is a defamation case in the clothing of a different tort. As the Seventh Circuit has observed, permitting tortious interference in this context would allow an 'end run' around the rules that apply to invasion of privacy, and defamation involving media defendants.” Seminole Tribe of Florida v. Times Publishing Company, Inc. [780 So. 2d 318 District Court of Appeals Fla. 4th District (2001)].
25. When a case can arguably, on its facts, be called either libel or something else, libel trumps the other cause. “Any libel of a corporation can be made to resemble in a general way this archetypal wrongful-interference case, for the libel will probably cause some of the corporation's customers to cease doing business with it;…But this approach would make every case of defamation of a corporation actionable as wrongful interference thereby enabling plaintiff to avoid the specific limitations with which the law of defamation-presumably to some purpose-is hedged about.” Brown & Williamson Tobacco Corp. v. Jacobson, 713 F 2d 262, (7th Cir. 1983)
26. In determining whether Florida Statute 770.01 applies, the key words and phrases in the statute are “publication,” “libel,” “other medium,” and “false and defamatory.” Plaintiffs therefore implicitly and repeatedly admit that Florida Statute 770.01 applies by their choice of words in the Second Amended Complaint (Exhibit C) as follows:
o Their “tortious interference” and trademark and related causes of action are, in fact, libel as evidenced by their use of such phrases as “false and defamatory” in the following general paragraphs: Introduction, 4(c), 4(d), 8, 9, 30, 31, 32, 33, 34, 35, 36, 37, 39, 40
o Their defamation per se cause of action is libel as evidenced by their use of such phrases as “false and defamatory” in the following paragraphs: 58, 59, 60, 61, 62, 63 and “publication” or “published” in ¶¶ 58, 59, 60, 61
'ACTUAL MALICE' AND 'PER SE' ALLEGATIONS
27. During this litigation, plaintiffs have flip-flopped with regard to whether they are public figures and whether REED is a member of the media. The current complaint indicates that they are, for the moment, back to the position that matches reality, that is, they are public figures and REED is a media defendant. They reveal this by alleging “actual malice” in the Second Amended Complaint. By thus tracking the language of the New York Times v. Sullivan [376 U.S. 254 (1964)] line of Supreme Court decisions, Plaintiffs implicitly admit that they are public figures and REED is a member of the media. The Times v. Sullivan line of Supreme Court decisions established that public-figure plaintiffs suing media defendants must prove “actual malice” to a clear and convincing degree in order to prevail. See also Bose Corp. v. Consumers Union of United States, 466 U.S. 485 (1984)
28. Accusing REED of “defamation per se” also admits implicitly that REED is a media defendant. Florida Supreme Court Justice J. Ehrlich said that, “Libel per se is dead.” “Presumed damages for libel per se are no longer available, and that the 'per se' concept is relevant only as a useful shorthand for giving a media defendant notice that the plaintiff is relying upon the words sued upon as facially defamatory, and therefore actionable without resort to innuendo.” [Emphasis added] Mid-Florida Television Co. v. Boyles, 467 So. 2d 282 (Fla 5th DCA 1983)
ENTIRE LAWSUIT IS ABOUT ONE WORD
29. This entire lawsuit is about one word that was at one page of REED's Web site for four days in February of 2003. Although Plaintiffs rant and rave in the Second Amended Complaint about numerous libelous statements at REED's Web site, general wailing does not state a defamation claim. To sue over false and defamatory statements, the plaintiff must specifically identify them under both common law and Florida Statute 770.01. Plaintiffs have not specifically identified any such statements other than the word “insolvent” and they failed to give written Florida Statute 770.01 notice with regard to that word.
30. “Even in federal courts and jurisdictions in which in haec verba pleadings are not required, the defamation must be pleaded with enough specificity to permit the defendant to respond appropriately to the complaint, including the ability to allege that the communication in question was not defamatory.” Sack on Defamation §2.4.13
'INSOLVENT'
31. The following statement was published on one page of REED's Web site four four days in February, 2003:
Whitney Information Network, Inc. is insolvent. That is, their liabilities ($27,299,907) exceed their assets ($24,315,757) as of the last reported date: 9/30/02. [Exhibit D]

32. Plaintiffs' counsel Scott Rothstein telephoned REED demanding that the word “insolvent” be removed from REED's Web or Plaintiffs would sue. REED retracted it that same day saying instead that WIN had a “negative net worth” to convey the point thereafter. Plaintiffs sued REED anyway shortly afterward.
33. As stated above, this Court should grant REED summary judgment as to all Plaintiffs' libel claims because they failed to give REED specific written notice before filing them as required by Florida Statute 770.01. In addition to the above reasons, this Court should grant summary judgment as a matter of law with regard to the defamation per se of a business reputation claim because Plaintiffs cannot prove that the complained-of statements are false.
34. Plaintiffs cannot prove that statement “[WIN] is insolvent” was false because WIN was, and remains, insolvent according to the definition REED specified.
35. The word “insolvent” has two common definitions: One is liabilities
that exceed assets. This is the definition used in a number of laws. For example, Internal Revenue Code §108(d)(3) says,

(3) Insolvent.-For purposes of this section, the term “insolvent” means
the excess of liabilities over the fair market value of assets.

36. Federal bankruptcy law 11 USC §101 (32) says:

“insolvent” means -- (A) with reference to an entity other than a
partnership and a municipality, financial condition such that the sum of
such entity's debts is greater than all of such entity's property, at a
fair valuation…