Medical Properties Trust, Inc. v. Viceroy Research, LLC

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

MEDICAL PROPERTIES TRUST, INC., }

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Plaintiff, }

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v. } Case No.: 2:23-cv-00408-RDP

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VICEROY RESEARCH, et al., }

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Defendants. }

MEMORANDUM OPINION

I. Introduction

This matter is before the court on Defendants Gabriel Bernarde and Aidan Lau’s 12(b)(6)

and 12(b)(2) Motion to Dismiss. (Doc. # 60). In their Motion, Defendants incorporate in full the

arguments made by Defendants Viceroy and Fraser Perring in their 12(b)(2) and 12(b)(6)

Motions to Dismiss. (Doc. # 60 at 1); (Docs. # 16, 17). In an earlier order, the court denied those

Motions (Doc. # 53). The conclusions reached and reasoning applied in deciding those motions

apply equally here. While the court will not rehash its analysis in full, it addresses certain points

raised by Defendants calling into question the reasoning of the court’s analysis in denying

Defendants’ Viceroy and Perring’s Motions. And, for the reasons outlined in that memorandum

opinion (Doc. # 56) and those reasons below, Defendants’ Motion (Doc. # 60) is due to be

denied.

II. Background

This case arises out of Defendants Viceroy, Perring, Bernarde, and Lau’s alleged efforts

to manipulate Plaintiff Medical Properties Trust’s (“Plaintiff” or “MPT”) stock price in order to

profit on their short position. On March 30, 2023, Plaintiff filed this action alleging defamation

and other state law claims.

A. MPT’s Business Practices

Plaintiff MPT is a real estate investment trust (“REIT”) that acquires, develops, and

invests in healthcare facilities. (Doc. # 1 ¶ 10). MPT has long been one of Alabama’s largest and

most prominent publicly traded companies, and its largest REIT. (Id. ¶ 1). MPT acquires and

develops healthcare facilities to lease out to operating companies under long-term net leases,

which require tenants to bear most of the costs associated with the properties. (Id. ¶ 20). A

typical lease provides for a term of at least 15 years with a series of short renewal options. (Id. ¶

22). MPT’s business model is centered around steady, long-term returns for its investors. (Id. ¶

24). To that end, MPT underwrites real estate investments that are attractive to hospital

operators, so that if an operator breaks its lease, a replacement operator will be quickly found to

assume the lease. (Id.).

Among the characteristics MPT looks for in evaluating hospital real estate are: (1)

good physical quality reflecting a history of maintenance and improvements; (2)

location in a strong market, with measurable patient demand growth, sustainable

reimbursement sources, and features that attract a dedicated workforce; (3) a

geographic environment in which the operator is likely to hold a strong

competitive position; and (4) facility-level operations with strong EBITDARM

(earnings before interest, taxes, depreciation, amortization, rent, and management

fees) coverage of lease payments.

(Id.). MPT reasons that a medical facility meeting these criteria is likely to reflect a true

“community need,” meaning its success is not dependent on a given operator. (Id.).

For example, in 2016 and 2018, MPT purchased nine Massachusetts hospitals from

hospital operator Steward Health Care System for approximately $1.3 billion. (Id. ¶ 25). In 2022,

private equity firm Macquarie Asset Management entered into a joint venture with MPT for eight

of those Massachusetts hospitals, which had a total valuation of about $1.7 billion, an increase in

value over the purchase price of some $400 million. (Id.). In the interim, those hospitals had

yielded about $475 million in income for MPT. (Id.). This is MPT’s bread and butter: invest in

an attractive facility, generate income from that facility, then sell the facility for a profit.

MPT currently has investments in 444 facilities, the vast majority of which are leased to

55 tenants. (Id. ¶ 27). Its revenues exceeded $1.5 billion in 2022, making it “one of the largest

REITs in the healthcare sector and among the largest publicly traded companies in Alabama,

where the majority of its employees are located.” (Id.). MPT has retained

PricewaterhouseCoopers (“PwC”) as its independent auditor since 2008. (Id. ¶ 28). Every year

since 2008, “PwC has issued an unqualified opinion that MPT’s financial statements ‘present

fairly, in all material respects, the financial position of’ the Company and ‘the results of its

operations and its cash flows’ for the relevant periods in conformity with generally accepted

accounting principles.” (Id. ¶ 29).

B. Short-Selling and Short-and-Distort Campaigns

Taking a short position involves a bet that a stock’s price will fall. A trader takes a short

position by “sell[ing] a security first with the intention of repurchasing … later at a lower price.”

James Chen, Short Position: Meaning, Overview, and FAQs, Investopedia (Sept. 12, 2022)

https://www.investopedia.com/terms/s/short.asp. Because a stock’s price can never fall below $0,

the short-seller’s potential profit is capped. But, because there is no limit to how high a stock

price may rise, short sellers “face unlimited downside risk.” (See id.).

Because the risk inherent in short selling is so high, some short sellers engage in “short-

and-distort” campaigns. (Doc. # 1 ¶ 31). That is, they “publish[] … or otherwise promot[e] false

and misleading information about the companies they bet against.” (Id.). Doing so allows short

sellers to “drive down those companies’ stock prices and generate profit for themselves.” (Id.).

The Securities and Exchange Commission has recently proposed a rule designed in part to

combat these illegal short-and-distort campaigns. 87 F.R. 14950, 14991-94 (Mar. 16, 2022) (“[I]f

short and distort type behavior were to be suspected, then the Commission would be more likely

to identify individuals with large short positions and could thus quickly focus any inquiries on

entities in an economic position to potentially profit from manipulation.”).

C. Viceroy and the Individual Defendants’ Accusations Against MPT

Defendant Viceroy is a financial research firm founded by Fraser Perring, a citizen of the

United Kingdom, along with Gabriel Bernarde and Aidan Lau, both Australian citizens. (Id. ¶

11). On January 26, 2023, Viceroy published a report titled “Medical Properties (dis)Trust,” in

which it noted that it had a short position in MPT. (Doc. # 1 ¶ 41). That same day, Viceroy and

the Individual Defendants began using their Twitter accounts to promote their report and

otherwise criticize MPT. (Id. ¶ 42). Defendants went on to publish 13 more reports on MPT,

purportedly consisting of research on MPT’s business practices. (Id.). In each of these reports,

and in a February 2, 2023 letter Defendants published to Twitter, Viceroy claims to have

analyzed and found wanting “the accounting treatment MPT has applied in its financial

statements.” (Id. ¶ 43). MPT identifies four categories of misrepresentations that it asserts subject

Defendants to liability: (1) false accusations of “round-tripping;” (2) false characterizations of

MPT’s executive compensation formula; (3) false accusations of lying about dealings with

operator-tenant Steward; and (4) false accusations of fraud and criminal activity. (Id. ¶ 45).

1. Round-Tripping

Round-tripping occurs when a party transacts with a counterparty to provide funds with

the understanding that the counterparty will later return those funds in a second transaction. (Id. ¶

46). The original party then records the returned funds as revenue. (Id.). For example, A agrees

to sell B a pencil for $1. At the outset, both parties agree that A will later purchase the same

pencil from B for the same price at which A sold it. When A re-purchases the pencil from B, B

records a $1 revenue infusion despite no additional revenue going into its coffers.

Plaintiff provides several examples of Defendants accusing it of round-tripping. (Id. at ¶¶

47-54). Among these allegedly “false, misleading, and defamatory” statements were accusations

that: (1) MPT’s rent was round tripped by fake purchases of massively inflated assets; (2) MPT

has engaged in billions of dollars of uncommercial sale-leaseback transactions; (3) MPT

appeared to constantly overpay for fire sale assets by as much as 10x, “which in turn allow debt-

crippled tenants to meet their financial rent obligations as and when they fall due in the short

term;” and (4) MPT paid $27.5 million to build a hospital near Houston, Texas despite the total

cost of development and market value being only $9.1 million. (Id.).

2. Executive Compensation

Viceroy also claimed that MPT executives profited under an executive compensation

program that “encourage[d] an aggressive, acquire-at-any-cost policy which ultimately align[ed]

with a revenue round-tripping model.” (Id. ¶ 55). Viceroy further claimed that, because

acquisitions were a factor in its calculation, this compensation structure led MPT management to

“consistently scrape[] the bottom of the barrel in its search for new properties and new tenants.”

(Id.). MPT alleges that these statements are false, misleading, and defamatory because (1) after

total acquisition value reaches a certain threshold (which was well surpassed in 2020 and 2021),

executives receive no credit per new acquisition; and (2) poorly performing acquisitions

negatively affect other compensation inputs. (Id. ¶ 56-57). So, any conceivable advantage an

executive might receive from blindly acquiring unprofitable properties is negated by the harm

such a strategy would do to the executive’s bottom line.

3. Allegations of Concealment

MPT maintains an extensive business relationship with operator-tenant Steward

Healthcare Systems, the largest private physician-led healthcare network in the United States.

(Id. ¶ 58). MPT also has a direct equity stake in Steward of just under 10% and has made loans to

Steward that MPT deemed beneficial. (Id.). Despite past success in its dealings with Steward,

MPT informed its investors on earnings calls that it has sought to diversify its portfolio and

reduce its relative exposure to Steward. (Id.).

One of Viceroy’s lines of attack on MPT concerned MPT’s relationship with Steward.

Viceroy allegedly released a series of reports claiming that MPT is “deliberately concealing a

secret ownership in certain Steward-connected hospitals in Malta.” (Id. ¶ 59). Specifically,

Viceroy (1) claimed that MPT “paid $205m for 3 hospitals worth $27m in Malta that were

purportedly under investigation for corruption” (Id. ¶ 63) (internal quotations omitted); (2)

published an organizational chart that showed MPT as an owner of “Steward Malta” (Id. ¶ 65);

and (3) repeatedly accused MPT of fraudulently concealing its investment in Maltese hospitals.

(Id. ¶¶ 66-69). MPT denies any direct investment in Maltese hospitals.1

4. Public Accusations of Fraud

In addition to the allegedly defamatory statements included in Viceroy’s reports, Viceroy

and the Individual Defendants have taken to social media to accuse MPT of fraud and other

criminal wrongdoing. For example, throughout February 2023, Defendant Perring tweeted

separately that: (1) MPT “is verging on the largest US #Healthcare #fraud;” (2) MPT and

Steward are “#Fraudulent piece[s] of [expletive];” (3) MPT is a “#ponzi scheme reliant on

1 In its Complaint, MPT outlines its relationship to the hospitals in Malta in detail. (Doc. # 13 ¶¶ 60-62).

But, it is unnecessary for the court to address the description of that relationship here.

#RoundTripping, insane #AFFO, with @Steward & #MPW are part of an international

corruption investigation. #Fraud everywhere…to quote one great man, #ItsAScam;” (4) MPT

and Steward are “bad actors, with fraudulent and deceitful operations.” (Id. ¶ 71). Perring also

repeatedly assured his Twitter followers that MPT executives would soon be criminally charged

and imprisoned for their wrongdoing, and that MPT would soon be mired in class action

lawsuits. (Id. ¶ 72).

D. Viceroy’s Disclaimers

In each of its reports on MPT, Viceroy included a blanket disclaimer that the report “has

been prepared for educational purposes only and expresses [Viceroy’s] opinion,” and that no

information in the report should be construed as “an opinion on the merits or otherwise of any

particular investment or investment strategy.”(Id. ¶ 74). For its part, MPT alleges that “the false,

misleading, and defamatory statements identified in [its] Complaint are not ‘opinions’ or

‘beliefs’ but rather statements of purported fact, whose fundamental character cannot be altered

by disclaimers.” (Id. ¶ 76).

E. Other Allegations

1. Conspiracy

In addition to its defamation claims, MPT alleges that Viceroy has conspired with another

financial research firm who shares an interest in driving MPT’s stock price down. That firm,

unnamed in the Complaint, generates revenue from subscriptions and benefits when its

predictions about particular stocks pan out. (Id. ¶ 78). To that end, agents of the conspirator firm

have allegedly amplified Viceroy’s attacks on MPT and engaged in similar attacks on social

media in an effort to harm MPT. (Id. ¶ 79-80).

2. Conduct Directed at Alabama

MPT claims that Viceroy knew MPT was headquartered in Birmingham, Alabama, and

that its executives and employees primarily lived and worked in Birmingham when it began

these allegedly defamatory attacks. (Id. ¶ 81-82). As a result, MPT contends that Viceroy could

have reasonably expected that MPT “would suffer the effects of [Viceroy’s] defamatory

falsehoods in Alabama.” (Id. ¶ 82). Indeed, not only did MPT repeatedly disclose its principal

place of business in public securities filings, but Viceroy acknowledged that it knew MPT was

located in Birmingham. (Id.). In January 2023, Viceroy tweeted: “[i]n 2003 HealthSouth

executives admitted their involvement in similar accounting #fraud to [MPT]. Like [MPT] they

were based in Birmingham, Alabama.” (Id.). Additionally, the February 2, 2023 letter Viceroy

posted to Twitter was addressed to a partner in PwC’s Birmingham office. (Id. ¶ 83). Finally on

February 13 and 14, 2023, Plaintiff alleges that a conspirator traveled to Alabama to conduct

diligence concerning MPT. (Id.).

3. Concrete and Ongoing Harm to MPT

In March 2023, Steward sought to broker a deal with a Texas health system involving an

MPT-owned hospital. (Id. ¶ 85). But, the health system backed out of the deal, citing a Viceroy

report and publicly stating that its “mission and values are not aligned with Medical Properties

Trust.” (Id.). Further, S&P Global Ratings downgraded MPT’s issuer credit rating, which raised

MPT’s cost of borrowing money. (Id. ¶ 87). MPT also believes that Viceroy’s actions have

strained its relationship with bondholders. (Id.). MPT points to a report by market research firm

Green Street in which it notes that Viceroy “contributed to the sell-off in [MPT’s] share price.”

(Id. ¶ 88) (alterations in original). Finally, in its pleadings, MPT details the cost it has been

forced to incur to retain employees and increase security at its Birmingham headquarters in

response to Defendants’ attacks on MPT and its executives. (Id. ¶ 89).

III. Legal Standards

A. Rule 12(b)(2) Motion to Dismiss

A Rule 12(b)(2) motion tests the court’s exercise of personal jurisdiction over a

defendant. See Fed. R. Civ. P. 12(b)(2). “A plaintiff seeking the exercise of personal jurisdiction

over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts

to make out a prima facie case of jurisdiction.” United Techs. Corp. v. Mazer, 556 F.3d 1260,

1274 (11th Cir. 2009); see Posner v. Essex Ins. Co., 178 F.3d 1209, 1214 (11th Cir. 1999) (“A

plaintiff seeking to obtain jurisdiction over a nonresident defendant initially need only allege

sufficient facts to make out a prima facie case of jurisdiction.”).

“A federal district court in [Alabama] may exercise personal jurisdiction over a

nonresident defendant to the same extent that [an Alabama state] court may, so long as the

exercise is consistent with federal due process requirements.” Licciardello v. Lovelady, 544 F.3d

1280, 1283 (11th Cir. 2008); see Ala. R. Civ. P. 4.2. The Supreme Court recognizes two types of

personal jurisdiction that are consistent with these requirements: general jurisdiction and specific

jurisdiction. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923-24

(2011). Only the court’s exercise of specific jurisdiction is at issue here.

The court applies a two-part analysis in determining whether there is specific personal

jurisdiction over a nonresident defendant. See Cable/Home Cmmc’n Corp. v. Network Prods.,

Inc., 902 F.2d 829, 855 (11th Cir. 1990); see also Alexander Proudfoot Co. World Headquarters

L.P. v. Thayer, 877 F.2d 912, 919 (11th Cir. 1989). First, the court considers the jurisdictional

question under the state long-arm statute. See Cable/Home Commc’n Corp., 902 F.2d at 855; see

also Alexander Proudfoot Co., 877 F.2d at 919. If there is a basis for asserting personal

jurisdiction under the state statute, the next question is whether sufficient minimum contacts

exist to satisfy the Due Process Clause of the Fourteenth Amendment such that “maintenance of

the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940));

Cable/Home Commc’n Corp., 902 F.2d at 855; Alexander Proudfoot Co., 877 F.2d at 919. A

federal court may exercise personal jurisdiction over a nonresident defendant only if both prongs

of the analysis are satisfied.

Federal courts are required to construe the Alabama long-arm statute the same way the

Supreme Court of Alabama would. See Oriental Imports & Exports, Inc. v. Maduro & Curiel’s

Bank, N.V., 701 F.2d 889, 890-91 (11th Cir. 1983). Alabama’s long-arm statute permits personal

jurisdiction to the extent it “is not inconsistent with the [Alabama Constitution] or the

Constitution of the United States.” Ala. R. Civ. P. 4.2(b). Thus, the question here is whether

assertion of personal jurisdiction over Defendants comports with the Fourteenth Amendment’s

Due Process Clause. See Olivier v. Merritt Dredging Co., 979 F.2d 827 (11th Cir. 1992) (citing

Alabama Waterproofing Co., Inc. v. Hanby, 431 So. 2d 141, 145 (Ala. 1983)).

The requirements of the Fourteenth Amendment’s Due Process Clause are met where (1)

the defendant has minimum contacts with the forum state, and (2) the exercise of personal

jurisdiction does not offend “traditional notions of fair play and substantial justice.” Olivier, 979

F.2d at 830-31; Madara v. Hall, 916 F.2d 1510, 1516 (11th Cir. 1990) (quoting International

Shoe, 326 U.S. at 316). A defendant has established minimum contacts with the forum state

when he has “‘purposefully availed’ himself of the benefits of conducting activities in the forum,

and the litigation results from alleged injuries that ‘arise out of or relate to’ those activities.”

Burger King v. Rudzewicz, 471 U.S. 462, 472-73 (1985) (cleaned up); Consol. Dev. Corp. v.

Sherritt, Inc., 216 F.3d 1286, 1291 (11th Cir. 2000).

A defendant purposefully avails itself of the privileges of conducting activities in a state

“where the contacts proximately result from actions by the defendant himself that create a

‘substantial connection’ with the forum State.” Burger King, 471 U.S. at 475 (quoting McGee v.

Int’l Life Ins. Co., 355 U.S. 220, 223 (1957)). “Thus[,] where the defendant deliberately has

engaged in significant activities within a State … or has created continuing obligations between

himself and residents of the forum, he manifestly has availed himself of the privilege of

conducting business there.” Id. at 475-76 (quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770,

781 (1984); Travelers Health Ass’n v. Virginia, 339 U.S. 643, 648 (1950)).

As the Supreme Court has consistently held, the mere foreseeability of causing injury in

another state is not a “sufficient benchmark” for exercising personal jurisdiction. Burger King,

471 U.S. at 474 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980)).

Rather, to be subject to the court’s in personam jurisdiction, a defendants’ “conduct and

connection with the forum state are such that he should reasonably anticipate being haled into

court there.” Id. (quoting Volkswagen, 444 U.S. at 297). In determining whether a defendant

should have reasonably anticipated litigation in the forum, the Court has held that it is “essential

in each case that there be some act by which the defendant purposefully avails itself of the

privilege of conducting activities within the forum State, thus invoking the benefits and

protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958) (emphasis added).

Alternatively, a plaintiff harmed by an intentional tort may be afforded the opportunity to

seek redress where the harm was felt even if the defendant has not otherwise purposefully

availed itself of that forum. Calder v. Jones, 465 U.S. 783, 790 (1984) (“[a]n individual injured

in California need not go to Florida to seek redress from persons who, though remaining in

Florida, knowingly cause the injury in California.”). The Calder effects test requires a showing

that the defendant (1) committed an intentional tort, (2) that was directly aimed at the forum, and

(3) caused an injury within the forum that the defendant should have reasonably anticipated.

Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220 n.28 (citing Calder, 465 U.S. at

789-90) (outlining the prongs of the “effects” test).

In assessing whether litigation “arises out of” the activities in the forum state, the

Eleventh Circuit does not use “mechanical or quantitative” tests. See id. at 1222 (11th Cir. 2009).

However, it is “not enough that there be some similarity between the activities that connect the

defendant to the forum and the plaintiff’s claim.” Licciardello, 544 F.3d at 1285 n.3. A

defendant’s contacts with the forum must be related to the “operative facts of the controversy.”

Id.

Finally, if a plaintiff can show that (1) a defendant purposefully availed itself of the laws

of the forum state; or (2) the Calder “effects” test is satisfied; and (3) its claims arise out of the

defendant’s activities in the forum state, then the burden shifts to the defendant to show that

exercising jurisdiction would offend traditional notions of fair play and substantial justice.

Volkswagen, 444 U.S. at 292. This requires the court to consider: (1) the burden that would be

placed on the defendant if jurisdiction is asserted; (2) the forum state’s interest in adjudicating

the dispute; (3) the plaintiff’s interest in obtaining “convenient and effective relief” in the forum;

(4) the interests of the “interstate judicial system” in obtaining the most efficient resolution of

controversies; and (5) the shared interests of the several states in furthering “fundamental

substantive social policies.” Id. (internal citations omitted).

B. Rule 12(b)(6)

The Federal Rules of Civil Procedure require that a complaint provide “a short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

However, the complaint must include enough facts “to raise a right to relief above the

speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that contain

nothing more than “a formulaic recitation of the elements of a cause of action” do not meet Rule

8 standards, nor do pleadings suffice that are based merely upon “labels and conclusions” or

“naked assertion[s]” without supporting factual allegations. Id. at 555, 557. In deciding a Rule

12(b)(6) motion to dismiss, courts view the allegations in the complaint in the light most

favorable to the non-moving party. Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir.

2007).

To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible

on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although “[t]he

plausibility standard is not akin to a ‘probability requirement,’” the complaint must demonstrate

“more than a sheer possibility that a defendant has acted unlawfully.” Id. A plausible claim for

relief requires “enough fact[s] to raise a reasonable expectation that discovery will reveal

evidence” to support the claim. Twombly, 550 U.S. at 556.

In considering a motion to dismiss, a court should “1) eliminate any allegations in the

complaint that are merely legal conclusions; and 2) where there are well-pleaded factual

allegations, ‘assume their veracity and then determine whether they plausibly give rise to an

entitlement to relief.’” Kivisto v. Miller, Canfield, Paddock & Stone, PLC, 413 F. App’x 136,

138 (11th Cir. 2011) (quoting Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.

2010)) (emphasis added). That task is context specific and, to survive the motion, the allegations

must permit the court based on its “judicial experience and common sense . . . to infer more than

the mere possibility of misconduct.” Iqbal, 556 U.S. at 679. If the court determines that well-

pleaded facts, accepted as true, do not state a claim that is plausible, the claims are due to be

dismissed. Twombly, 550 U.S. at 570.

IV. Discussion

Plaintiff has asserted the following claims under Alabama law: (1) libel per se; (2) civil

conspiracy; (3) tortious interference with contractual or business relations; (4) private nuisance;

and (5) unjust enrichment. (Doc. # 1 at 38-43). On July 12, 2023, Bernarde and Lau filed a

Motion to Dismiss this case under Rule 12(b)(2) and Rule 12(b)(6). (Doc. # 60). Plaintiff

opposes the motion (Doc. # 62) and Bernarde and Lau have replied to that opposition. (Doc. #

63). The court addresses the parties’ arguments below.

A. Defendants’ 12(b)(2) Motion to Dismiss

As explained above, the court will not fully rehash its analysis of the similar issues raises

in previously ruled upon motions that were filed by Viceroy and Perring. (Doc. # 52). But, the

court addresses Defendants’ “request that the Court reconsider its ruling” on the grounds that the

court “overlooked substantial circuit authority [and] its own precedent rejecting the sweeping

application of the ‘effects test’ … that it applied here.” (Doc. # 60 at 2).

1. SWAC v. Urban Edge

Defendants argue that this court “recently found no jurisdiction in a case strikingly

similar to this one.” (Id.) (citing Southwestern Athletic Conf. [“SWAC”] v. Urban Edge Network,

LLC, No. 22-cv-486, 2022 WL 17721584 (N.D. Ala. December 15, 2022)). In that case, an

athletic conference (the “SWAC”) asserted state law claims of defamation, tortious interference,

and misrepresentation against a broadcaster that had contacted member institutions in an effort to

acquire the rights to market or distribute athletic and other events. SWAC, 2022 WL 17721584, at

*1. The court held that the plaintiff had failed to establish personal jurisdiction under the

“effects” test because the plaintiff failed to allege that Alabama was the “focal point” of the

defendants’ conduct. Id. at *4. As the court explained, “Plaintiff does not allege that any of the

referenced third parties contacted by Defendants are located in Alabama. Nor does Plaintiff

suggest that the allegedly improper communications took place when any relevant party to those

communications was in Alabama.” Id. at *5.

The court in SWAC considered whether an Alabama plaintiff could establish personal

jurisdiction over a foreign defendant when that defendant’s conduct consisted of contacting a

number of independent institutions, none of which were located in Alabama. The only party in

that case with any connection to Alabama was SWAC, an organization with which the

independent institutions were affiliated. The contact was between a foreign plaintiff and foreign

third-party institutions, regarding rights to broadcast events that would take place in states other

than Alabama.

Such indirect contact with the forum state stands in stark contrast to the facts alleged

here. In SWAC, there was no indication that any of the defendant’s contacts with the member

institutions referenced SWAC or Alabama, or otherwise implicated – let alone targeted – the

SWAC plaintiffs in any meaningful way. To the contrary, here, Viceroy made several directly

disparaging public statements about a corporation located in Alabama. (See Doc. # 1 ¶ 71).

Among these were direct public accusations of fraud and corruption, referring to Plaintiff by

name. (Id.). Indeed, remarkably, Viceroy tweeted that “HealthSouth executives admitted their

involvement in similar accounting #fraud to [Plaintiff]. Like [Plaintiff,] they were based in

Birmingham Alabama.” (Id. ¶ 82) (emphasis added). As the court stated previously, Plaintiff

plainly alleged that Defendants aimed their conduct at Alabama, and that Plaintiff felt the effects

in its home state. (Doc. # 56 at 15-17). Defendants’ attempts to analogize this case to SWAC are

misplaced.

2. Conspiracy Theory of Jurisdiction

Defendants also “request that the Court reconsider its holding that jurisdiction is

appropriate under the conspiracy theory of jurisdiction.” (Doc. # 60 at 5). Defendants argue that

Plaintiff has failed to plausibly allege a conspiracy because it “does not identify who the co-

conspirators are, when and how the conspiracy was formed, or the object of the conspiracy.”

(Id.). That assertion is questionable but, in any event, this is not the standard a court applies in

deciding whether a plaintiff has plausibly alleged a civil conspiracy under Alabama law.

In Alabama, “[t]o establish personal jurisdiction under a conspiracy theory, the plaintiff

must ‘plead with particularity the conspiracy as well as the overt acts within the forum taken in

furtherance of the conspiracy.’” J&M Assocs., Inc. v. Romero, 488 F. App’x 373, 375 (11th Cir.

2012) (citing Ex parte McInnis, 820 So. 2d 795, 806-07 (Ala. 2001)). “The elements of civil

conspiracy in Alabama are: (1) concerted action by two or more persons to (2) achieve an

unlawful purpose or a lawful purpose by unlawful means.” Id. (citing Luck v. Primus Auto. Fin.

Servs., Inc., 763 So. 2d 243, 247 (Ala. 2000)). “To be sure, the conspiracy averments in the

complaint must exceed ‘bald speculation’ and mere conclusory assertions.” Ex parte Reindel,

963 So. 2d 614, 623 (Ala. 2007) (citing Ex parte McInnis, 820 So. 2d at 806-807)). “However,

this burden is not heavy … because to require a more substantial showing in a case alleging a

civil conspiracy would be harsh, if not impossible in view of the difficulties of pleading and

proving a conspiracy.” Id. (cleaned up).

Here, Plaintiff has alleged that Defendants conspired with another financial research firm

that “generates revenue from subscriptions, and has acknowledged publicly that its continued

profitability turns on whether its predictions of a particular stock pans out.” (Doc. # 1 ¶ 78).

Moreover, in its pleadings, Plaintiff precisely alleged the conduct in which the conspiracy

engaged: “Defendants and the agents of this co-conspirator firm have parroted one another’s

language and accusations about MPT, retweeting each other’s messages with accompanying

words of support,” as well as “accus[ing] MPT and its executives of fraud and artificial boosting

of executive compensation, and both have perpetuated false statements about MPT’s supposed

ownership of Malta hospitals.” (Id. ¶ 79). Further, Plaintiff alleged that the intended outcome of

the conspiracy was to “drive down MPT’s stock price.” (Id. ¶ 78). Finally, Plaintiff alleges that

one of the conspirators traveled to Alabama on February 13 and 14, 2023, on an in-person

“diligence” trip concerning MPT. (Id. ¶ 83).

In sum, Plaintiff has clearly alleged a civil conspiracy claim under Alabama law. Plaintiff

has also alleged concerted action between Defendants and another financial research firm

(which, while not named, is clearly described with particularity). Plaintiff has further alleged

Defendants’ concerted actions were designed to achieve a lawful purpose (the collapse of MPT’s

stock price) by unlawful means (defamatory statements). And, Plaintiff has alleged that overt

acts were undertaken in the forum state that were designed to further the conspiracy.

Accordingly, on the face of the pleadings, the conspiracy theory of jurisdiction applies here.

B. Defendants’ 12(b)(6) Motion

Defendants also request that the court reconsider its denial of Defendant Viceroy and

Perring’s 12(b)(6) Motion to Dismiss, and contend “the court did not address key facts and

controlling law.” (Doc. # 60 at 5). Again, the court will not rehash its analysis in full. However,

the court again addresses certain arguments made by Defendants.

1. Plaintiff alleged that Defendants’ statements were false and

defamatory.

The court begins by noting that, in their 12(b)(6) Motion, Defendants contend only that

the statements in Viceroy’s published reports were not defamatory. (Doc. # 60 at 5-7). Of course,

these are not the only statements at issue. Plaintiff alleges that the social media campaign in

which Defendants allegedly engaged was replete with defamatory statements consisting of

tweets and a letter posted to Twitter, which were independent of the reports. (See, e.g., Doc. # 1

¶¶ 48, 49, 50, 55, 56, 66, 71, 72, 73, 82). So, even if the court concluded that the statements in

Viceroy’s reports were unactionable (and, to be clear, the court does not reach that conclusion),

Defendants would not be entitled to the dismissal of this action under Rule 12(b)(6).

Defendants argue that the statements in Viceroy’s reports are unactionable because “the

published report[s] expressly state[] that the conclusions therein are the opinions of the authors.”

(Doc. # 60 at 5-6) (citing Turner v. Wells, 879 F.3d 1254, 1264-65 (11th Cir. 2018)). To that end,

Defendants further contend that the reports “are not the stuff of libel” because the reports

“express opinions based on disclosed, publicly available facts … with robust disclaimers

clarifying that the conclusions are nothing more than the author’s opinions.” (Id. at 6) (citing

Turner, 879 F. 3d at 1265). Importantly, Defendants suggest that “MPT does not allege or argue

that the supporting evidence cited is fabricated or inaccurate–because it is not.” (Id.).

This is simply untrue. Even a cursory examination of Plaintiff’s Complaint reveals a

number of allegations that the evidence cited in Plaintiff’s reports is, at the very least, inaccurate.

(See, e.g., Doc. # 1 ¶¶ 47, 52, 59, 63, 64, 65, 68, 69). Whether Plaintiff’s factual allegations will

ultimately be proven is a separate question, and one not appropriate for the court to consider at

this stage of the litigation. Plaintiff alleges, repeatedly and in detail, how the purported evidence

underlying Viceroy’s conclusions is false. The allegedly false evidence underlying the

conclusion is not merely a statement of opinion, and the publication of the allegedly false

evidence cannot be made into an opinion even with “robust cautionary disclaimers that the

conclusions therein were opinion only.” (Doc. # 60 at 7).

Defendants rely heavily on Turner v. Wells to support their contention that statements of

opinion are not actionable. 879 F.3d at 1264-65. Turner concerned a report prepared by a law

firm following an investigation into the bullying of Miami Dolphins player Jonathan Martin.

Turner, 879 F.3d at 1259. That report detailed several instances of inappropriate behavior in

which the plaintiff engaged, including, as relevant here, (1) his participation in homophobic

taunting of the player; (2) his “poor judgment” in texting the player; (3) his failure to stop

insulting comments of which he was aware; and (4) the establishment of a “Judas Code,”

according to which “snitches” would be fined. Turner, 879 F.3d at 1263-1268.

In Turner, the court held that statements in the report were not actionable because the

purportedly defamatory statements were merely opinions and conclusions based on

uncontroverted evidence that was also included in the report. Id. Indeed, the Panel repeatedly

stressed that the plaintiff did not challenge the truthfulness of the underlying evidence. See, e.g.,

Turner, 879 F.3d at 1264 (listing undisputed facts underlying the defendant’s conclusion). Here,

as discussed above, Plaintiff has plainly alleged that the evidence underlying the conclusions in

Viceroy’s reports was inaccurate. So, while the court agrees that conclusions or statements of

opinion based on undisputed facts are nonactionable, the publication of allegedly false

information underlying a conclusion or opinion does not fall into that category. Plaintiff’s

12(b)(6) Motion is due to be denied.

2. Actual Malice

Finally, the court briefly addresses Defendants’ request that the court apply the “actual

malice” standard despite its prior ruling that the record was insufficiently developed to do so.

(Doc. # 60 at 7-9); (Doc. # 56 at 23-27). Defendants maintain that “MPT is, at a minimum, a

limited purpose public figure for the purposes of this dispute.” In its Reply Brief in support of its

Motion to Dismiss (which, again, Defendants incorporated here), Viceroy argued that a

corporation may be considered a limited purpose public figure by virtue of its participation in a

heavily regulated industry. (Doc. # 39 at 3-5). In its decision on Defendants Viceroy and

Perring’s Motions to Dismiss, the court laid out the framework by which a corporation may be

considered a limited purpose public figure under Alabama law. (Doc. # 56 at 26). The court

reiterates that it has insufficient information to make a determination on that issue at this stage of

the case.

Defendants chide the court for its unwillingness to determine whether actual malice is the

applicable standard at this stage in the litigation. (Doc. # 60 at 9). To be sure, the standard

governing Plaintiff’s claim should be determined as early in the litigation as possible. See Michel

v. NYP Holdings, Inc., 816 F.3d 686, 702 (11th Cir. 2016). But, in Michel, the court determined

that the question of whether actual malice was properly plead should be decided purely on the

pleadings when the plaintiff’s status as a public figure is not in dispute. Id. The matter is

undoubtedly complicated when the question is not just whether actual malice was plead, but

whether the plaintiff was a public figure and therefore the plaintiff was required to plead actual

malice.

Indeed, “courts regularly find that the determination of a litigant's status as a public or

private figure should be deferred until summary judgment when a full factual record can be

developed.” LifeMD, Inc. v. Lamarco, 607 F. Supp. 3d 576, 591 (W.D. Pa. 2022) (citing

Goldfarb v. Kalodimos, 539 F. Supp. 3d 435, 455-56 (E.D. Pa. 2021); (Gillon v. Bernstein, No.

12-04891, 2013 WL 5159625, at *5 (D. N.J. Sept. 12, 2013) (“the [c]ourt finds it appropriate to

defer the public figure inquiry until after the record has been more fully developed through

discovery”) (alterations in original); Trivedi v. Slawecki, No. 11-cv-02390, 2012 WL 5987410, at

*3 (M.D. Pa. Nov. 28, 2012) (whether a plaintiff is a public figure “is more appropriately

resolved at the summary judgment stage on the basis of record evidence.”)).

As to Defendants’ suggestion that discovery would not reveal anything not already

known with respect to establishing Plaintiff’s status as a public figure, the court disagrees. (Doc.

# 60 at 9). For example, information about the (1) “notoriety of the corporation to the average

individual in the relevant geographic area;” (2) “the nature of the corporation’s business;” and/or

(3) “the frequency and intensity of media scrutiny that a corporation normally receives” relates to

matters that should be examined during discovery and the answers to those inquires would

greatly aid the court in determining whether Plaintiff is a public figure. Snead v. Redland

Aggregates Ltd., 998 F.2d 1325, 1329 (5th Cir. 1993) (establishing a nonexclusive three-part test

to determine whether a corporation is a public figure in the absence of “a general rule to be

applied to corporations.”).

IV. Conclusion

For the reasons above, Defendants’ 12(b)(2) and 12(b)(6) Motions to Dismiss (Doc. # 60)

are due to be dismissed. An order consistent with this memorandum opinion will be entered

separately.

DONE and ORDERED this September 1, 2023.

□□ DAVID Zz. 24 2

UNITED STATES DISTRICT JUDGE

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