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John T. Reed' motion to dismiss Russ Whitney' insolvent suit UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION WHITNEY INFORMATION NETWORK, INC., a Colorado Corporation, Plaintiff, v. JOHN T. REED, an individual, CASE NO.: 03-60597-SEITZ Defendant. _____________________________________ DISPOSITIVE MOTION TO DISMISS PURSUANT TO F.R.C.P. RULE 12(b)(6) AND SUPPORTING MEMORANDUM OF LAW BY DEFENDANT Now comes the defendant, John T. Reed, pro se, and moves this court pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the captioned complaint against him. In support thereof, the defendant asserts as follows: The complaint fails to state a claim upon which relief can be granted. MEMORANDUM OF LAW DEFAMATION 1. Plaintiff is a public figure and Defendant published the complained-of word in the media. Plaintiff acknowledges that in '¶29 of the complaint by alleging that Defendant "published false statements"¦with actual malice and total disregard for the truth"¦" Cases involving public-figure plaintiffs and media defendants are governed by New York Times v. Sullivan, 376 U.S. 270 (1964). That decision established the requirement for "actual malice" in such cases. "Actual malice" is a term of art which has nothing to do with ill will. The "actual malice" standard requires proof not only of falsity, but also that the defendant either knew the words were false or published them with reckless disregard as to their falsity. The decision places the burden of proof with regard to falsity on Plaintiff and requires Plaintiff to meet a "clear and convincing" standard rather than the usual civil standard of "preponderance of the evidence." [Emphasis added] 2. The Court should dismiss the Complaint as a matter of law because the allegedly false statements are true and the Court can take judicial notice of their truthfulness. 3. The only Defendant statements alleged to be false and defamatory are that Plaintiff Whitney Information Network, Inc. (WIN) is" insolvent" and "on the verge of

bankruptcy" (Complaint '¶27). "INSOLVENT" 4. The word "insolvent" has two common definitions: One is liabilities that exceed assets. This is the definition used in a number of state and federal 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. [Emphasis in original] Federal bankruptcy law 11 USC '§101 (32) provides: "insolvent" means -- (A) with reference to an entity other than a partnership and a municipality, financial condition such that the sum of such entity' debts is greater than all of such entity' property, at a fair valuation"¦ 5. Defendant removed all possible confusion as to which definition of "insolvent" he intended by adding the sentence, "That is, their liabilities ($27,299,907) exceed their assets ($24,315,757) as of the last reported date: 9/30/02." ('¶15 of the Complaint) 6. In a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court may consider matters which are properly the subject of strict judicial notice such as matters of public record [Kramer v. Time Warner, Inc., 937 F 2d 767 (CA 2 NY 1991)]. The assets and liabilities of WIN are a matter of public record. Defendant obtained the figures in question from the most recent filing by WIN with the Securities and Exchange Commission (SEC)"”a Form S-1 filed by WIN on February 12, 2003 (Exhibit A, page 22). That form is available to all at the EDGAR Web site (https://www.sec.gov/edgar) which is maintained by the SEC. "ON THE VERGE OF BANKRUPTCY" 7. Plaintiff' statement in '¶26 of the complaint that Defendant said WIN was "on the verge of bankruptcy" is false. It mischaracterizes Defendant' actual statement which is accurately quoted in '¶15 of the Complaint. 8. There are two categories of bankruptcy: "¢ voluntary "¢ involuntary 8. Defendant plainly stated in his Web comments that involuntary bankruptcy of WIN ""¦seems unlikely"¦" and explained why. 9. With regard to voluntary bankruptcy, Defendant accurately states that WIN is "eligible" to declare bankruptcy because it is insolvent as defined at Defendant' Web comments and in bankruptcy law. Defendant stated that he was not aware of any voluntary bankruptcy filing by WIN. Defendant made no statement whatsoever regarding the likelihood that WIN would voluntarily declare bankruptcy in the future. "DE MINIMIS NON CURAT LEX" 10. Plaintiff admits in '¶14 of the Complaint that the complained-of words were only on Defendant' Web site for four days. 11. In '¶23 of the Complaint, Plaintiff claims that "Dissemination of the false information for even one day via the World Wide Web constitutes possible dissemination to millions world wide." The word "possible" renders the sentence almost meaningless. 12. The phrase "World Wide Web" accurately describes the geographical reach enjoyed by any individual "surfer" of the Internet, but it is a misleading phrase when used, as in this case, to suggest how many persons visit a particular obscure Web page. 13. The aforementioned Form S-1 filed by WIN with the SEC on February 12, 2003 said that the total number of shareholders of Plaintiff is 320 (Exhibit A, page 6). It is common knowledge that only shareholders or prospective shareholders of a particular company would have any interest in reading a Web page about Plaintiff' stock. It is also common knowledge that investors do not all scan the Web every day looking for new articles about a stock that is of interest to them. It is likely that no Internet search engine ever indexed the Web comments in question during their brief four-day existence. If so, no one could have found the complained-of comments through a search engine. They could only have seen them if they were at the one Defendant Web page linked to the complained-of page. Consequently the likely readership of the complained-of words is only a handful of persons other than the parties and Plaintiff' employees and attorneys. The court may consider facts which are matters of common knowledge [Sears Roebuck & Company, v. Metropolitan Engravers, Ltd., 245 F 2d 67 (CA9 Cal 1956)] in a F.R.C.P. 12(b)(6) motion. 14. In view of the likely minuscule readership of the complained-of words, the matter is too insignificant for the Court to allow Plaintiff to make a federal case of it. TRADEMARK AND RETRACTION IRRELEVANT 15. Plaintiff' lengthy discussions of trademark and retraction are irrelevant to both their complaint and this motion. VIOLATION OF F.R.C.P. RULE 11 15. This complaint violates Rule 11 of the Federal Rules of Civil Procedure. It was filed for improper purpose, that is, to harass, cause unnecessary delay, and needless increase in the Defendant' cost of litigation [F.R.C.P. 11(b)(1)]. The complaint should not have been filed at all and, if filed, should have been filed in the Fort Myers Division of the Middle District of Florida as an amendment to Plaintiff' previously filed complaint against the same defendant with regard to criticism of Plaintiff at the same Web site (Case No.:2:02-cv-288-FtM-290DNF). 16. The Complaint also violates F.R.C.P. 11(b)(3) in that its factual contentions lack evidentiary support. 17. Defendant does not now move the Court for sanctions under Rule 11 because he has not yet served such a motion upon the Plaintiff' counsel 21 days in advance as required by F.R.C.P. 11(c)(1)(A)(b). Wherefore the defendant moves this court to dismiss the complaint against him with attorney fees and costs. Respectfully submitted, _______ _____________________ date John T. Reed Defendant 342 Bryan Drive Alamo, CA 94507 Telephone: 925-820-6292 Fax: 925-820-1259 www.johntreed.com Copyright 2003 Last update 4/23/03 John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

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