Case 0:17-cv-60426-UU Document 385 Entered on FLSD Docket 12/18/2018 Page 1 of 19 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. 1:17-cv-60426-UU ALEKSEJ GUBAREV, et al., Plaintiffs, v. BUZZFEED, INC., et al., Defendants. ____________________________________/ ORDER THIS CAUSE comes before the Court upon Plaintiffs’ Motion for Summary Judgment on Defendants’ “Public Figure” Affirmative Defense (D.E. 208) and Defendants’ Motion for Partial Summary Judgment on Issue of Plaintiffs’ Status as Public Figures (D.E. 225). For the reasons discussed below Plaintiffs’ motion is granted; Defendants’ motion is denied. BACKGROUND The facts recited below are undisputed except as otherwise noted. I. The Parties Plaintiff Aleksej Gubarev is a resident of the Republic of Cyprus. D.E. 212-2 ¶ 3. Until January 1, 2018, he was the chairman and CEO of Plaintiff XBT Holdings S.A. (“XBT”). Id. ¶ 1. XBT is a Luxembourg company. D.E. 38 ¶ 7. Plaintiff Webzilla, Inc. (“Webzilla”), which is a Florida corporation, is a subsidiary of XBT. Id. ¶ 8; D.E. 212-2 ¶ 2. 1 Case 0:17-cv-60426-UU Document 385 Entered on FLSD Docket 12/18/2018 Page 2 of 19 Defendant BuzzFeed, Inc. (“BuzzFeed”) is a Delaware corporation with offices in eighteen cities around the world, including New York. D.E. 38 ¶ 9. Defendant Ben Smith is BuzzFeed’s editor-in-chief, and he resides in Brooklyn, New York. Id. ¶ 10. II. The Dossier On January 10, 2017, BuzzFeed published an online article entitled These Reports Allege Trump Has Deep Ties to Russia (the “Article”), which included a 35-page dossier (the “Dossier”). D.E. 1-3, ¶ 1; D.E. 38 ¶ 1; D.E. 1-2 p. 19–21. In the Article, BuzzFeed described the Dossier as a compilation of memoranda assembled “for political opponents of Trump by a person who is understood to be a former British Intelligence agent.” D.E. 1-2 p. 20. One memorandum, dated December 13, 2016, contains statements about Plaintiffs. As published by BuzzFeed, the pertinent portion of that memorandum appeared as follows: [Redacted…] reported that over the period March-September 2016 a company called XBT/Webzilla and its affiliates had been using botnets and porn traffic to transmit viruses, plant bugs, steal data, and conduct “altering operations” against the Democratic Party leadership. Entities linked to one Alexei GUBAROV [sic] were involved and he and another hacking expert, both recruited under duress by the FSB,[1] Seva KAPSUGOVICH were significant players in this operation. In Prague, COHEN[2] agreed [sic] contingency plans for various scenarios to protect the operation, but in particular what was to be done in the event that Hillary CLINTON won the presidency. It was important in this event that all cash payments owed were made quickly and discreetly and that cyber and other operators were stood down/able to go effectively to ground to cover their traces. (We reported earlier that the involvement of political operatives Paul MANAFORT and Carter PAGE in the secret TRUMP-Kremlin liaison had been exposed in the media in the run-up to Prague and that damage limitation of these also was discussed by COHEN with the Kremlin representatives). D.E. 1-3. ¶ 26, D.E. 1-2 p. 19–21. The Article included the following disclaimers: The dossier, which is a collection of memos written over a period of months, includes specific, unverified, and potentially unverifiable allegations . 1 FSB refers to the Russian intelligence service. 2 “COHEN” refers to Michal Cohen, then-candidate Donald Trump’s lawyer. D.E. 1-2, p. 18. 2 Case 0:17-cv-60426-UU Document 385 Entered on FLSD Docket 12/18/2018 Page 3 of 19 BuzzFeed News reporters in the US and Europe have been investigating various alleged facts in the dossier but have not verified or falsified them . [The Dossier] is not just unconfirmed: It includes some clear errors. Id. ¶ 3, D.E. 1-2, p. 20. Plaintiffs allege that the Dossier’s statements about them are false. D.E. 1-3 ¶ 27. Plaintiffs also allege that although BuzzFeed tasked its reporters with investigating the allegations, Defendants never contacted Plaintiffs to determine whether the allegations that they hacked the Democratic Party had merit. Id. ¶ 28, D.E. 38 ¶ 28. Plaintiffs assert that because Defendants could not verify the Dossier and knew that it contained “some clear errors,” Defendants published it without reasonable care for, or with reckless disregard as to the truth. Id. ¶ 43. They go on to allege that Defendants’ decision to publish the Dossier defamed them. Id. ¶ 51. Defendants assert, among other affirmative defenses, that Plaintiffs are public figures and thus are required to prove actual malice. D.E. 38, p. 10. III. Plaintiffs’ Public Relations Activities In 2005, Gubarev started Webazilla (later named Webzilla) as a small server company. D.E. 211-2 ¶ 3. Over the next decade or so, Gubarev and his team grew Webzilla and started other computer hosting companies, including Servers.com. Id. ¶ 4. All of these companies operate under the umbrella of XBT. Id. Beginning in 2012, XBT and Webzilla began to circulate press releases using a London- based company, Marketwired, which circulates press releases worldwide. D.E. 212-2 ¶ 19. In a 2014 press release, Webzilla described itself as a peer of giant companies like Netflix, Google, and Akamai. Id. ¶ 20. That same year, XBT issued a press release about its acquisition of a website called DDoS.com, which it described as improving XBT’s ability to deal with online 3 Case 0:17-cv-60426-UU Document 385 Entered on FLSD Docket 12/18/2018 Page 4 of 19 security threats. Id. ¶ 22. Then in 2015, XBT issued a press release about a service called SecureVPN, which it described as a “unique version of online safety and help with internet protection.” Id. ¶ 21. In 2015, Servers.com hired a public relations firm, Cutler PR, to generate publicity. D.E. 211-2. ¶ 9. It was the first of XBT’s subsidiaries to do so. Id. Servers.com let Cutler decide what media they would target. Id. ¶ 12. Cutler proposed drafting articles for industry trade publications. D.E. 211-12, p. 61. Cutler described the articles as “not generally profile stories of the company,” but rather, representative of “the company’s views (as articulated through a senior executive) on a particular topic in the industry.” Id. Their purpose was to show that Servers.com and its executives were experts in the field of data hosting and thus to add to their credibility. Id.; D.E. 212-2 ¶ 26. Cutler persuaded several publications to publish op-ed style articles promoting Servers.com. D.E. 212-2 ¶ 30. One publication, called Inc., described Servers.com as one of “18 Tech Companies to Get Excited About,” and noted that Servers.com “boasts super-secure servers.” Id. ¶ 31. Cutler claimed responsibility for that publicity. Id. Servers.com was unsatisfied with Cutler’s efforts, and so suspended its services after only five months. D.E. 211-2. ¶ 16. Four months after that, Servers.com retained a new public relations firm, KGlobal. Id. ¶ 17. KGobal was retained for the sole purpose of increasing Servers.com’s sales. Id. As with Cutler, Servers.com deferred to KGlobal’s advice about public relations strategy. Id. ¶ 18. Part of this strategy involved trying to convince various publications to write profiles Gubarev. Id. ¶ 19. Gubarev specifically requested that his name be included in the articles. D.E. 212-2 ¶ 52. To some publications, KGlobal called Gubarev “a great resource for stories 4 Case 0:17-cv-60426-UU Document 385 Entered on FLSD Docket 12/18/2018 Page 5 of 19 about the Russian tech, startup and business scene . .” D.E. 211-2 ¶ 19; D.E. 211-14, p. 2. To others, it simply referred to him as the CEO of Servers.com and offered to introduce the publication to that company’s services. Id. These efforts resulted in interviews with AppMasters, Forbes, Bloomberg, Business Insider, VentureBeat, and Tech Insider. Id. ¶ 20; D.E. 212-2 ¶ 55. KGlobal provided training to Gubarev and other executives on “how to talk to a journalist.” D.E. 212-2 ¶ 50. KGlobal also assisted Servers.com in issuing press releases; some of which were republished by online publications. D.E. 211-2 ¶ 21. The relationship between Servers.com and KGlobal lasted only about three months; Gubarev terminated it after concluding that KGlobal was not generating sufficient publicity. Id. ¶ 22; D.E. 212-2 ¶ 62. Besides these two relationships with public relations firms, Gubarev and XBT’s various subsidiaries have been referenced in a few other publications which discussed a photography app that they created and Gubarev’s professional success.3 Id. ¶ 23; D.E. 211-15. They have also won awards as hosting providers and were interviewed by internet hosting trade publications. Id. ¶¶ 24, 25. Additionally, Gubarev and XBT’s subsidiaries appeared at or sponsored events related to their businesses. D.E. 211-2 ¶ 24. IV. Plaintiffs’ Business Outreach In Russia In or around 2015, as XBT began expanding its business into Russia, that country enacted a data privacy law. D.E. 212-2 ¶ 32. Gubarev thought the new law was a business opportunity for XBT. Id. ¶ 34. XBT issued a press release describing its entrance into the Russian data storage market. Id. ¶ 35; D.E. 212-49. Gubarev and other XBT executives spoke to the press 3 This summary of the cited publications’ contents is the Court’s own based on the English-language publications included as exhibits. The other publications are not in English, but Defendants do not challenge Plaintiffs’ description of them as relating to “marketing of business or local matters in Cyprus” and so the Court accepts that characterization as undisputed.