Wealthy Inc. v. Cornelia

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 WEALTHY, INC., et al., Case No. 2:21-CV-1173 JCM (EJY)

8 Plaintiff(s), ORDER

9 v.

10 SPENCER CORNELIA, et al.,

11 Defendant(s).

12 13 Presently before the court is plaintiffs Wealthy, Inc. (“Wealthy”) and Dale Buczkowski 14 (“Buczkowski”) (collectively “plaintiffs”)’ motion for partial summary judgment. (ECF No. 60). 15 Defendants Spencer Cornelia (“Cornelia”), Cornelia Media, LLC, and Cornelia Education, LLC 16 (collectively “defendants”) filed a response (ECF No. 162), to which plaintiffs replied (ECF No. 17 172). 18 19 Also before the court is defendants’ special motion to dismiss pursuant to NRS 41.660 20 (ECF No. 61) consolidated with their motion for summary judgment (ECF No. 62). Plaintiffs 21 filed responses to these motions (ECF Nos. 78 and 79), to which defendants replied (ECF No. 22 182). 23 I. Background 24 25 This action arises out of a series of interviews published on YouTube and conducted by 26 Cornelia that plaintiffs perceive as defamatory. Buczkowski is the owner and operator of 27 Wealthy, described in the complaint as a “leading entrepreneurship, finance, business, real-estate 28 and self-improvement company.” (ECF No. 1 at 3). Buczkowski operates Wealthy under the 1 name Derek Moneyberg, a federally registered trademark. (Id.). Buczkowski has amassed a 2 following of 23,700 subscribers on YouTube, and his videos have garnered over 1.2 million 3 views on the platform. (Id.). 4 Cornelia also maintains a strong social media presence, operating an eponymous 5 6 YouTube channel with approximately 150,000 subscribers and publishing videos on investing, 7 business, and fitness that have received over 13.8 million views. (Id. at 4). Pertinent to this case, 8 Cornelia also published a series of videos entitled “Authentic or Charlatan” in which he claims to 9 expose “fake gurus on social media.” (Id.). 10 Between December 2020 and February 2021, defendants produced multiple interviews 11 12 with another internet personality, John Mulvehill (“Mulvehill”), a dating and self-improvement 13 coach. (Id. at 6-7). The statements in the videos, most of which are from Mulvehill, form the 14 basis of plaintiffs’ lawsuit. In the videos, plaintiffs allege that Cornelia and Mulvihill published 15 five false assertions about Buczkowski. These assertions are that Buczkowski (1) lied about his 16 educational achievement; (2) laundered money; (3) manufactured and/or sold illegal drugs; (4) 17 18 framed Mulvehill for his 2013 arrest in Las Vegas, leading to four felony and four misdemeanor 19 charges; and (5) was involved in the death of a 28-year-old woman who was the alleged victim 20 in the arrest of Mulvehill. (Id. at 8, 12). 21 Plaintiffs’ complaint includes causes of action for (1) unfair competition and false 22 advertising under the Lanham Act, (2) defamation, (3) intentional infliction of emotional 23 24 distress, and (4) business disparagement. (Id. at 19-22). 25 Plaintiffs now move the court for partial summary judgment on their defamation claim. 26 (ECF No. 60). Defendants filed a special motion to dismiss under Nevada Revised Statute 27 (“NRS”) 41.660, Nevada’s statute for strategic lawsuits against public participation (“anti- 28 1 SLAPP statute”). (ECF No. 61). In conjunction with their anti-SLAPP motion, defendants filed 2 a motion for summary judgment. (ECF No. 62). 3 While defendants do not satisfy each individual criterion under Nevada’s anti-SLAPP 4 statute, there is no genuine dispute of material fact as to any of plaintiffs’ four causes of action. 5 6 The court denies defendants’ special motion to dismiss but grants their motion for summary 7 judgment in its entirety. Such action thereby renders plaintiffs’ motion for partial summary 8 judgment on the defamation claim as moot and the court hereby dismisses the case. 9 II. Legal Standard 10 A. Special motions to dismiss under NRS 41.660 11 12 An analysis involving a special motion to dismiss under Nevada’s anti-SLAPP statute 13 consists of a two-pronged approach. See Rosen v. Tarkanian, 453 P.3d 1220, 1223 (2019). To 14 prevail on an anti-SLAPP motion to dismiss, a defendant must satisfy the first prong through 15 showing “by a preponderance of the evidence that the claim is based upon a good faith 16 communication in furtherance of the right to petition or the right to free speech in direct 17 18 connection with an issue of public concern.” Id.; NRS 41.660(1)(a). 19 The “good faith communication” must be either “truthful” or “made without knowledge 20 of its falsehood” and it must have a “direct connection with an issue of public interest.” NRS 21 41.637(4). If the defendant satisfies this prong, the plaintiff has the burden of satisfying the 22 second prong by demonstrating with prima facie evidence a probability of prevailing on his or 23 24 her claims. See Rosen, 453 P.3d at 1223. 25 B. Motions for summary judgment 26 The Federal Rules of Civil Procedure allow summary judgment when the pleadings, 27 depositions, answers to interrogatories, and admissions on file, together with the affidavits, if 28 1 any, show that “there is no genuine dispute as to any material fact and the movant is entitled to 2 judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment 3 is “to isolate and dispose of factually unsupported claims . . . .” Celotex Corp. v. Catrett, 477 4 U.S. 317, 323–24 (1986). 5 6 For purposes of summary judgment, disputed factual issues should be construed in favor 7 of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to 8 be entitled to a denial of summary judgment, the non-moving party must “set forth specific facts 9 showing that there is a genuine issue for trial.” Id. 10 In determining summary judgment, the court applies a burden-shifting analysis. “When 11 12 the party moving for summary judgment would bear the burden of proof at trial, it must come 13 forward with evidence which would entitle it to a directed verdict if the evidence went 14 uncontroverted at trial.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 15 (9th Cir. 2000). Moreover, “[i]n such a case, the moving party has the initial burden of 16 establishing the absence of a genuine issue of fact on each issue material to its case.” Id. 17 18 By contrast, when the non-moving party bears the burden of proving the claim or 19 defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate 20 an essential element of the non-moving party’s case; or (2) by demonstrating that the non- 21 moving party failed to make a showing sufficient to establish an element essential to that party’s 22 case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 23 24 323–24. If the moving party fails to meet its initial burden, summary judgment must be denied, 25 and the court need not consider the non-moving party’s evidence. See Adickes v. S.H. Kress & 26 Co., 398 U.S. 144, 159–60 (1970). 27 28 1 If the moving party satisfies its initial burden, the burden then shifts to the opposing party 2 to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith 3 Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the 4 opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient 5 6 that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ 7 differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 8 809 F.2d 626, 630 (9th Cir. 1987). 9 In other words, the nonmoving party cannot avoid summary judgment by relying solely 10 on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 11 12 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and 13 allegations of the pleadings and set forth specific facts by producing competent evidence that 14 shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324. 15 At summary judgment, a court’s function is not to weigh the evidence and determine the 16 truth, but to determine whether a genuine dispute exists for trial. See Anderson v. Liberty Lobby, 17 18 Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all 19 justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the 20 nonmoving party is merely colorable or is not significantly probative, summary judgment may be 21 granted. See id. at 249–50. 22 The Ninth Circuit has held that information contained in an inadmissible form may still 23 24 be considered for summary judgment if the information itself would be admissible at trial. 25 Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003) (citing Block v. City of Los Angeles, 253 26 F.3d 410, 418-19 (9th Cir. 2001)) (“[t]o survive summary judgment, a party does not necessarily 27 28 1 have to produce evidence in a form that would be admissible at trial, as long as the party satisfies 2 the requirements of Federal Rule of Civil Procedure 56.”). 3 III. Dicussion 4 A. Special motion to dismiss and Nevada’s anti-SLAPP statute 5 6 Defendants seek dismissal of plaintiffs’ claims based on Nevada’s anti-SLAPP statue, but 7 they fail to satisfy the first prong of statutory analysis. See Rosen, 453 P.3d at 1223. Defendants 8 must show, by a preponderance of the evidence, that the claim is based upon a good faith 9 communication in furtherance of the right to petition or the right to free speech in direct 10 connection with an issue of public concern.” Id.; NRS 41.660(1)(a) (emphasis added). 11 12 The court agrees with defendants that their speech is directly connected to an issue of 13 public concern or interest. Buczkowski is a public figure, as discussed in the court’s defamation 14 analysis, infra. By its own admission, Wealthy actively markets its courses on various social 15 media channels, including YouTube, Instagram, Facebook, Twitter, LinkedIn, Spotify, and 16 Apple Podcasts. (ECF No. 1 at 3). Wealthy also offers individual training sessions with 17 18 Buczkowski, with prices starting at $60,000 and often exceeding $75,000. (Id.). 19 Given the amount of money individuals are paying for these services and Buczkowski’s 20 growing ubiquity on social media, prospective clients have the right to know about 21 Buczkowski’s background and form their own opinions on him, especially if they have qualms 22 about a lack of his altruistic intent. There is no doubt that the public would be interested in 23 24 Buczkowski’s character. See Nygard, Inc. v. Uusi-Kerttula, 72 Cal. Rptr. 3d. 210, 220 (Cal. Ct. 25 26 27 28 1 App. 2008) (defining an “issue of public interest” as “any issue in which the public is 2 interested.”).1 3 Despite defendants’ speech directly connecting to an issue of public concern or interest, 4 they fail to meet the preponderance of the evidence standard that their claim is based on a good- 5 6 faith communication. Under Rosen, defendants must demonstrate that “the statements were 7 made in good faith . . . because the gist or sting of the statements were substantively true.” 453 8 P.3d at 440. Defendants fail to do so. 9 Instead, defendants state that “Cornelia did not know or believe any statement in any of 10 the videos at issue, whether uttered by him or Mulvehill, was false.” (ECF No. 61 at 30). 11 12 Although there is evidence that Cornelia researched Mulvehill’s claims and sources, which is 13 sufficient to show there was no actual malice on his part, Cornelia does not provide sufficient 14 proof that he was unaware such statements by Mulvehill concerning Buczkowski could be false. 15 Defendants thus fail to meet their requisite burden in satisfying the first prong of 16 Nevada’s anti-SLAPP statute, and the court must deny their special motion to dismiss. (ECF No. 17 18 61). The court now must analyze their motion for summary judgment on each of plaintiffs’ four 19 causes of action. 20 B. Unfair competition and false advertising under the Lanham Act 21 Defendants move the court to enter summary judgment on plaintiffs’ claim for unfair 22 competition and false advertising under the Lanham Act. Under the Lanham Act, a person or 23 24 business is liable for using promotion and advertising to disparage another entity to obtain 25 business and profit. 15 U.S.C. § 1125. This circuit has defined “promotion” and “advertising”

26 1 Defendants are correct in stating that Nevada courts have often looked to case law 27 applying California’s anti-SLAPP statute, as the statutes are almost identical. (ECF No. 61 at 21); see Coker v. Sassone, 432 P.3d 746, 749 n.3 (Nev. 2019) (“California’s and Nevada’s 28 statutes share a near-identical structure for anti-SLAPP review. Both statutes posit a two-step process for determining how to rule on an anti-SLAPP motion.”). 1 as constituting: (1) commercial speech, (2) by a defendant who is in commercial competition 2 with a plaintiff, (3) for the purpose of influencing consumers to buy defendant’s goods or 3 services, that (4) is sufficiently disseminated to the relevant purchasing public. Ariix, LLC v. 4 NutriSearch Corp., 985 F.3d 1107, 1115 (9th Cir. 2021). 5 6 The court need only analyze the commercial speech element of plaintiff’s claim under the 7 Lanham Act. The Ninth Circuit characterizes commercial speech as meeting three criteria: (1) 8 speech that is an advertisement, (2) speech that refers to a particular product, and (3) speech in 9 which the speaker has an economic motivation. Id. at 1115-16. 10 Plaintiffs fail to satisfy the Ninth Circuit’s first guidepost regarding commercial speech, 11 12 as none of the subject videos are advertisements. Plaintiffs aver that defendants utilized their 13 platform on YouTube to advertise their products and services. (ECF No. 79 at 11-12). 14 Specifically, they argue that there was promotion of Cornelia’s “house hack expert book” and a 15 “first 1,000 subscribers mentoring program.” (Id. at 12). Plaintiffs commit a flaw fatal in their 16 argument by citing Cornelia’s biographical YouTube information, not any of the videos 17 18 themselves. (ECF No. 79-6 at 2) (emphasis added). Nowhere in the videos with Cornelia and 19 Mulvehill is there any mention of the “house hack expert” mentorship program. The subject of 20 this action is the YouTube videos themselves, not the YouTube channel as a whole. 21 Moreover, plaintiffs misinterpret the evidence by claiming Cornelia’s real estate business 22 was referenced in the first video. (ECF No. 79 at 12). This statement is an exaggeration. It was 23 24 Mulvehill who, during the interview and unprompted by Cornelia, said to him, “you do have 25 some real estate stuff on the side.” (Id.). Cornelia simply responded to the statement by saying, 26 “right.” (Id.). 27 28 1 Cornelia never expounded upon his real estate portfolio in the video when Mulvehill 2 raised the issue, and plaintiffs fail to point to any timestamp in any video in which Cornelia 3 advertised his own services. Plaintiffs cannot cite to a timestamp in which Cornelia advertises 4 his services because he never did so. Cornelia’s speech was thus not an advertisement and 5 6 therefore not commercial speech. There is no genuine issue of material fact, and the court grants 7 defendants’ motion for summary judgment as to plaintiffs’ claim for unfair competition and false 8 advertising under the Lanham Act. 9 C. Defamation 10 Defendants seek dismissal of plaintiffs’ cause of action for defamation. To establish a 11 12 cause of action for defamation in Nevada, a plaintiff must allege: (1) a false and defamatory 13 statement by the defendant concerning the plaintiff; (2) an unprivileged publication to a third 14 person; (3) fault, amounting to at least negligence; and (4) actual or presumed damages. Wynn v. 15 Smith, 16 P.3d 424, 427 (Nev. 2001); see Pegasus v. Reno Newspapers, Inc., 57 P.3d 82, 90 16 (Nev. 2002). 17 18 For public figures, there is an additional requirement to bring a defamation claim. Public 19 figures must prove that the alleged defamer acted with actual malice. See generally New York 20 Times Co. v. Sullivan, 376 U.S. 254 (1964). A court may find that a defendant acted with actual 21 malice when the defendant made the statement with falsity or reckless disregard for the truth. 22 Id. at 279-80 (emphasis added). 23 24 The central question before the court is whether plaintiffs are public figures. Defendants 25 claim plaintiffs are limited-purpose public figures, defined as people or groups who voluntarily 26 inject themselves or are drawn into a particular public controversy and thereby become public 27 figures for a limited range of issues. Gertz v. Robert Welch, Inc., 418 U.S. 323, 351 (1974). 28 1 The court has no apprehension in determining that plaintiffs are, at the very least, limited- 2 purpose public figures. Plaintiffs counter defendants’ contention that they plaintiffs are limited- 3 purpose public figures because they claim defendants only cite documents evidencing plaintiffs’ 4 pervasive fame notoriety after defendants filed their motion for summary judgment. (ECF No. 5 6 79 at 3-4). 7 Plaintiffs’ contention that they are not public figures because defendants cites only to 8 evidence filed after the videos were submitted is irrelevant. In their complaint, plaintiffs 9 describe Buczkowski as a public figure. He is the owner and operator of Wealthy, described as a 10 “leading entrepreneurship, finance, business, real-estate and self-improvement company.” (ECF 11 12 No. 1 at 3). Buczkowski also owns a federally registered trademark. (Id.). He has amassed a 13 following of 23,700 subscribers on YouTube, and his videos have garnered over 1.2 million 14 views on the platform. (Id.). 15 Plaintiffs cannot “have it both ways.” Either they are public figures as they claim in 16 describing the reach of their YouTube channel, or their claims about viewership are mere puffery 17 18 designed to mislead the court. Taking plaintiffs at their word in their complaint, the court finds 19 that they are public figures. 20 The court need not analyze each individual element of defamation and can instead 21 determine if plaintiffs acted with actual malice. As stated, supra, actual malice may be found 22 only when a statement is made with falsity or reckless disregard for the truth. Sullivan, 376 U.S. 23 24 254 at 279-80. Reckless disregard requires that a publisher “entertained serious doubts as to the 25 truth of his publication.” St. Amant v. Thompson, 390 U.S. 727, 731 (1968). A publisher does 26 not have to investigate personally, but may rely on the investigation and conclusions of reputable 27 sources. Reader’s Digest Ass’n v. Sup. Ct. of Marin Cnty., 690 P.2d 610, 617-18 (Cal. 1984). 28 1 Here, all of the allegedly defamatory statements were uttered by Mulvehill, not Cornelia. 2 Cornelia was simply interviewing Mulvehill. Thus, plaintiffs’ claim is more appropriately 3 directed at Mulvehill. Regardless of this fact, the evidence in the record shows that Cornelia did 4 not act with reckless disregard in conducting his interview with Mulvehill. As described, infra, 5 6 Cornelia published his videos based on reasonable information he received from reliable sources. 7 For example, in his deposition, Cornelia testified that he received information from 8 Mulvehill, prior to publishing the first or second videos, about the plaintiffs’ allegedly 9 unscrupulous business practices, such as not authoring their own content in the self-help videos. 10 (ECF No. 62-3 at 34-35). This information included a video from a former employee of 11 12 plaintiffs who corroborated claims about plaintiffs’ unethical business practices and their using 13 young, unqualified people to write the instructional and promotional material for plaintiffs’ 14 courses. (Id. at 34-35, 114). Additionally, Cornelia received numerous emails about plaintiffs’ 15 character. (Id. at 34-35). He never had any information contradicting negative claims about 16 plaintiffs when the videos were published. (Id. at 116). Even if Cornelia were mistaken, his 17 18 conduct is not remotely close to constituting reckless disregard. Thus, defendants did not act 19 with actual malice, and the court grants their motion for summary judgment as plaintiffs’ claim 20 for defamation. 21 By granting this portion of defendants’ motion for summary judgment, plaintiffs’ motion 22 for partial summary judgment (ECF No. 60) is denied as moot. 23 24 D. Intentional infliction of emotional distress 25 Defendants move the court to grant summary judgment on plaintiffs’ claim for intentional 26 infliction of emotional distress. To establish this cause of action for intentional infliction of 27 emotional distress under Nevada law, a plaintiff must establish that: (1) the defendant's conduct 28 1 was extreme and outrageous; (2) the defendant either intended or recklessly disregarded the 2 causing of emotional distress; (3) the plaintiff actually suffered severe or extreme emotional 3 distress; and (4) the defendant's conduct actually or proximately caused the distress. Olivero v. 4 Lowe, 995 P.2d 1023, 1025 (Nev. 2000). “Extreme and outrageous conduct is that which is 5 6 outside all possible bounds of decency and is regarded as utterly intolerable in a civilized 7 community.” Maduike v. Agency Rent-A-Car, 953 P.2d 24, 26 (Nev. 1998). 8 Public figures and public officials may not recover for the tort of intentional infliction of 9 emotional distress by reason of publication such as the one at issue without showing, in addition 10 to the four elements of the claim listed above, that the publication contains a false statement of 11 12 fact which was made with actual malice. Hustler Mag., Inc. v. Falwell, 485 U.S. 46, 56 (1988). 13 In its analysis of plaintiffs’ defamation claim, the court has already shown that the 14 statements made in the YouTube videos between Cornelia and Mulvehill were not done so with 15 actual malice. Plaintiffs fail to demonstrate any evidence that they suffered severe emotional 16 distress. 17 18 In defendants’ interrogatories to plaintiffs, defendants ask them to identify all facts that 19 support the contention that they have suffered damages, including in the form of emotional 20 distress. (ECF No. 62-4 at 21). Plaintiffs answer this interrogatory by claiming they received 21 “reports from their clients and potential clients that they have been contacted on Instagram by 22 accounts with zero posts or followers that repeat the false and defamatory statements.” (Id. at 23 24 22). The answer to this interrogatory does not contain any specific evidence that plaintiffs 25 suffered emotional distress. There is no genuine issue of material fact, and the court grants 26 defendants’ motion for summary judgment as to plaintiffs’ claim for intentional infliction of 27 emotional distress. 28 1 E. Business disparagement 2 Finally, defendants move the court for summary judgment on plaintiffs’ claim for 3 business disparagement. The court can analyze this claim succinctly. Nevada courts have 4 consistently held that a claim for business disparagement requires falsity and a higher malice 5 6 requirement that incorporates the actual malice standard and proof of special damages. See 7 Clark Cnty. Sch. Dist. v. Virtual Educ. Software, Inc., 213 P.3d 496, 503-04 (Nev. 2009). 8 Yet again, the crux of this claim hinges on whether defendants acted with actual malice. 9 The court has already concluded that they did not. Plaintiffs further fail to show any proof of 10 special damages. No reasonable jury could find that defendants committed business 11 12 disparagement towards plaintiffs, and the court thus grants defendants’ motion for summary 13 judgment as to this cause of action. 14 IV. Conclusion 15 Accordingly, 16 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that plaintiffs’ motion for 17 18 partial summary judgment (ECF No. 60) be, and the same hereby is, DENIED as moot. 19 IT IS FURTHER ORDERED that defendants’ special motion to dismiss (ECF No. 61) 20 be, and the same hereby is, DENIED. 21 IT IS FURTHER ORDERED that defendants’ motion for summary judgment (ECF No. 22 62) be, and the same hereby is, GRANTED. 23 24 The clerk is instructed to enter judgment and close the case. 25 . . . 26 . . . 27 . . . 28 1 An order from the court regarding defendant Optimized Lifestyle, LLC’s, motion for 2 attorneys’ fees (ECF No. 236) is forthcoming.2 3 DATED September 29, 2023. 4

5 __________________________________________ UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

28 2 Optimized Lifestyle, LLC is a defendant in a consolidated case.