Court: District Court, S.D. Florida; December 17, 2018; Federal District Court
Plaintiffs Aleksej Gubarev and Webzilla, Inc. filed motions for summary judgment regarding the public figure status in a case against defendants BuzzFeed, Inc. and Ben Smith. The court granted the Plaintiffs' motion and denied the Defendants' motion. The background indicates that Gubarev, a Cypriot resident and former CEO of XBT Holdings, and Webzilla, a Florida subsidiary of XBT, are claiming defamation following BuzzFeed's publication of an article on January 10, 2017, which included a dossier alleging connections between them and hacking operations against the Democratic Party. The dossier, attributed to a former British intelligence agent, contained unverified claims that Gubarev and his associates used botnets and pornographic traffic for malicious activities. The article included disclaimers about the unverified nature of the allegations and noted the presence of clear errors. Plaintiffs argue that BuzzFeed failed to verify the allegations or contact them for comment, asserting that the publication was made with reckless disregard for the truth.
Defendants claim that the publication of the Dossier constitutes defamation against them, while they argue that Plaintiffs are public figures and must demonstrate actual malice. In 2005, Gubarev founded Webazilla, later rebranded as Webzilla, which expanded into a group of companies under XBT, including Servers.com. From 2012, XBT and Webzilla used Marketwired for global press releases. Notable releases included Webzilla positioning itself alongside major companies like Netflix and Google in 2014, and XBT announcing its acquisition of DDoS.com for enhanced online security. In 2015, Servers.com enlisted Cutler PR for publicity, marking the first use of a PR firm by XBT’s subsidiaries. Cutler focused on drafting articles to establish Servers.com’s credibility in data hosting, leading to positive media mentions. However, Servers.com was dissatisfied with Cutler's results and switched to KGlobal, which aimed to boost sales and promote Gubarev’s profile in various publications. KGlobal's efforts included interviews and press training for Gubarev. This relationship ended after three months due to insufficient publicity. Gubarev and XBT’s entities also gained recognition in other publications and participated in events related to their industry.
In 2015, as XBT expanded into Russia, the country implemented a data privacy law, which Gubarev viewed as a business opportunity. XBT announced its entry into the Russian data storage market, with Gubarev and executives discussing the law and its implications in various press interactions. Gubarev highlighted concerns about botnets and server security during these communications. He also launched Servers.com in Russia, which received media attention, and spoke at the Russian Internet Forum, where Servers.com was a sponsor.
From the early 2000s to the early 2010s, Gubarev's company organized an adult webmaster conference, attended by XBT executives. In 2006, he founded AWMOpen Magazine, with Webzilla as a sponsor, alongside other companies like McColo and 3fn.net at different times.
Following the 2016 U.S. election, Gubarev was contacted by Bloomberg regarding a Slate article discussing potential server communications between the Trump campaign and Alfa Bank. He requested an analysis from an XBT employee and conveyed that the story seemed implausible, which was later reflected in Bloomberg’s reporting.
In December 2016, the cybersecurity firm White Ops published a report about a fraud scheme dubbed "Methbot," allegedly involving Russian cybercriminals. XBT suspected a client leasing servers from Webzilla was involved, which posed a reputational risk. To mitigate potential negative press, XBT rehired KGlobal for public relations guidance, emphasizing the need to address the situation proactively due to heightened scrutiny related to Russian hacking during the election.
XBT directed KGlobal to communicate with White Ops and a journalist regarding the plaintiffs' status as victims of the Methbot scam, while instructing KGlobal to disclose only that the client was a Webzilla customer, deliberately avoiding mention of their newer brand, Servers.com. The legal standard for summary judgment requires the moving party to show no genuine issue of material fact exists, supported by pleadings and other evidence, and viewed in favor of the non-moving party. The non-moving party must then demonstrate the existence of an essential element of their case. Summary judgment may be denied even if parties agree on facts but disagree on inferences. The Court must resolve ambiguities in favor of the non-moving party. Defendants argue that plaintiffs are public figures unable to prove actual malice, with both parties seeking summary judgment on this issue. The determination of whether plaintiffs are public figures is a legal question for the Court, as established in relevant case law, particularly in light of the public figure doctrine which requires proof of actual malice for defamation claims against public figures.
The Supreme Court in Gertz identified two categories of public figures: all-purpose public figures, who possess widespread fame or notoriety, and limited public figures, who engage in specific public controversies. The parties concur that Plaintiffs are not all-purpose public figures but dispute their status as limited public figures. Establishing this status necessitates a two-part analysis.
The first part examines whether Plaintiffs have greater media access than typical private individuals and if they voluntarily positioned themselves for public scrutiny. Evidence shows that Plaintiffs had sufficient media contacts through public relations efforts, resulting in articles and interviews with notable publications, indicating greater media access than a private citizen typically enjoys. This access allowed Plaintiffs to manage their public image and respond to reputational threats.
The second part involves three steps: isolating the public controversy, assessing the Plaintiffs' involvement in it, and determining if the alleged defamation is relevant to their participation. The second Gertz criterion aligns with the second Silvester factor, which means the Court will not separately evaluate the second Gertz factor, as it is incorporated in determining limited public figure status. Thus, the analysis focuses on whether the Plaintiffs can be considered limited public figures concerning the specific controversy.
A public controversy exists if it is debated publicly and has significant implications for nonparticipants. This requires examining whether a specific question was actively discussed, as general concerns do not qualify. Newsworthiness is not sufficient proof of a public controversy, but media coverage can help define its scope. In this case, the plaintiffs characterize the controversy as an international conspiracy by the FSB to recruit hackers to undermine the 2016 election, while defendants suggest a broader perspective, including various issues related to cybersecurity and Russian interference. Defendants have presented multiple news articles to highlight the controversy's scope, including discussions on Russian cyber activities and general cybercrime. However, the law mandates that the relevant public controversy must be linked to the defamatory statements in question and their context. It is essential to consider the overarching narrative surrounding the statements, as these are part of a larger story involving allegations of the Russian government's support for President-elect Trump.
The CNN article referenced by BuzzFeed linked the Dossier to Russian interference in the 2016 election, highlighting the significant media and governmental focus on this issue at the time. The Dossier's relevance stemmed from its connection to the ongoing controversy regarding this interference, particularly as it only mentioned cybercrime and internet pornography in that context. The Court determined that the relevant controversy is specifically Russian interference in the 2016 election, rejecting the Defendants' broader interpretation.
In assessing the Plaintiffs' involvement in this controversy, the Court noted that Plaintiffs must demonstrate more than minor participation; they need to show "special prominence." This could be through actively attempting to influence the controversy or being in a position to realistically impact its resolution. The Court evaluated the Plaintiffs' past actions, media coverage, and public reactions to their statements.
The evidence indicated that the only relevant public comment from the Plaintiffs prior to BuzzFeed's Dossier publication was a statement from Gubarev, published by Bloomberg. Gubarev questioned the validity of the sources in a Slate article discussing potential communications between Trump campaign servers and a Russian bank. His commentary, while technical, did not directly address the core allegations of Russian hacking and thus did not constitute a substantial attempt to influence public debate on the matter. Therefore, it was concluded that Gubarev's statement could not be reasonably interpreted as having the potential to impact the ongoing controversy regarding Russian interference in the election.
Plaintiffs must have more than a peripheral role in a controversy to be considered limited public figures. Citing Wolston v. Reader's Digest Ass'n, the court underscored that mere involvement, such as grand jury testimony, does not confer public figure status. Plaintiffs lack the "special prominence" necessary for this designation, as not all who engage in public-impact activities become public figures. A public figure must wield significant influence in a specific area and actively advocate for controversial issues that affect others. The record lacks evidence of public reaction to the statement in question, further indicating that Plaintiffs are not public figures.
Defendants argued that Plaintiffs’ limited involvement, specifically Gubarev's statement to Bloomberg, still rendered them public figures, but the court found this unconvincing. Relevant case comparisons showed that those plaintiffs had far more substantial involvement in their respective controversies. Additionally, public statements by Plaintiffs unrelated to Russian election interference were deemed irrelevant. The court clarified that while cybersecurity and cybercrime may be broader issues, they must be directly connected to Russian interference to be pertinent. Similarly, involvement in the AWMOpen Conference and efforts to mitigate reputational damage post-White Ops report were found irrelevant, as they did not relate specifically to the controversy of Russian interference in the 2016 election.
Defendants have not established any public involvement by Plaintiffs in the relevant controversy outside of a Bloomberg article, thus Plaintiffs are not classified as public figures. The Court briefly addresses the relevance of the alleged defamation to Plaintiffs' participation in the controversy, noting that while the defamation relates to Russian interference in the election, the connection to Plaintiffs is marginal due to their limited involvement. The alleged defamation stems from a statement in the Dossier about cyber activities related to the Democratic Party and individuals allegedly linked to Plaintiffs, specifically Alexei Gubarev. Plaintiffs’ primary contribution to the controversy is Gubarev's statement in Bloomberg. The Court concludes that since Plaintiffs were tangential participants, they do not meet the criteria for limited public figure status. Consequently, Plaintiffs' Motion is granted, and Defendants' Motion is denied. The Court acknowledges the ambiguity surrounding the nature of the AWMOpen conference and the involvement of "adult webmasters," with conflicting interpretations about the conference's focus. It emphasizes that to assess the second Gertz factor, the specific controversy must be identified, as broader topics like cybercrime do not constitute controversies without a distinct dispute.
