FILED: NEW YORK COUNTY CLERK 03/08/2012 INDEX NO /2011 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 03/08/2012

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1 FILED: NEW YORK COUNTY CLERK 03/08/2012 INDEX NO /2011 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 03/08/2012 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : Index No /2011 SINO CLEAN ENERGY, INC., : : Hon. Shirley Werner Kornreich Plaintiff, : : Motion Sequence No. 5 : : v. : : ALFRED LITTLE; GEOINVESTING, LLC; and : JOHN DOES 1-10; : : Defendants. : : REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANT GEOINVESTING, LLC S MOTION TO DISMISS PLAINTIFF S FIRST AMENDED COMPLAINT DRINKER BIDDLE & REATH LLP 1177 Avenue of the Americas 41st Floor New York, NY (212) (telephone) (212) (facsimile) Attorneys for Defendant GEOINVESTING, LLC

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT...1 ARGUMENT...3 I. THE COMPLAINT SHOULD BE DISMISSED AS AGAINST GEOINVESTING FOR LACK OF PERSONAL JURISDICTION...3 A. GeoInvesting Is Not Subject To General Jurisdiction In New York General Jurisdiction Cannot Be Imposed Based On The GeoInvesting Website GeoInvesting s Short Selling Activities Do Not Give Rise To General Jurisdiction In New York GeoInvesting Did Not Have Contact With New York Through Its Association With PR Newswire...7 B. No Provision Of New York s Long-Arm Jurisdiction Statute Applies To This Case SCEI Fails To Allege Facts Giving Rise To Jurisdiction Under CPLR 302(a)(1) CPLR 302(a)(2) Cannot Apply Because it Expressly Exempts Defamation Claims...9 C. The Court Should Deny SCEI s Request for Jurisdictional Discovery...10 II. SCEI S CLAIMS FOR FRAUD AND TORTIOUS INTERFERENCE WITH BUSINESS RELATIONSHIPS SHOULD BE DISMISSED FOR FAILURE TO STATE A CAUSE OF ACTION...11 A. SCEI s Fraud Claim Must Be Dismissed Because SCEI Fails To Allege Reliance On Any Alleged Misrepresentation By GeoInvesting...11 B. SCEI Has Not Stated A Valid Claim For Tortious Interference With Business Relationships...12 CONCLUSION...14

3 TABLE OF AUTHORITIES CASES Bellepointe, Inc. v. Kohl's Dep't Stores, 975 F. Supp. 562 (S.D.N.Y. 1997)...10 Best Van Lines, Inc. v. Walker, 490 F.3d 239 (2d Cir. 2007)...8 Citigroup, Inc. v. City Holding Co., 97 F. Supp. 2d 549 (S.D.N.Y. 2000)...4 Daval Steel Prods. v. M.V. Juraj Dalmatinac, 718 F. Supp. 159 (S.D.N.Y. 1989) Deer Consumer Products, Inc. v. Alfred Little, Index No /2011, 2012 WL (N.Y. Sup. Ct., N.Y. Cnty. Jan. 27, 2012)...1-2, 4-5, 8, 11 Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65 (2006) Fantis Food, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317 (1980)...10 Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533 (1967)...3 GMS Grp., Inc. v. Sentinel Trust Co., et al., No , 1997 WL (S.D.N.Y. July 23, 1997)...6 Gilson v. Pittsburgh Forgings Co., 284 F. Supp. 569 (S.D.N.Y 1968)...6 Goldstock v. Restrepo, 209 A.D.2d 378 (N.Y. App. Div. 2d Dep't 1994)...7 Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183 (1980)...13 Island Rehabilitative Servs. Corp. v. Maimonides Med. Ctr., 19 Misc. 3d 1108(A) (N.Y. Sup. Ct., Kings Cnty. 2008)...13 Jacobs v. Felix Bloch Erben Verlag fur Buhne Film und Funk KG, 160 F. Supp. 2d 722 (S.D.N.Y. 2001) ii -

4 Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413 (1996)...11 Legros v. Irving, 38 A.D.2d 53 (N.Y. App. Div. 1st Dep't 1971)...9 Pitcock v. Kasowitz, Benson, Torres & Friedman LLP, 27 Misc. 3d 1238 (A) (N.Y. Sup. Ct., N.Y. Cnty. 2010)...13 Royalty Network Inc. v. Dishant.com, LLC, 638 F. Supp. 2d 410 (S.D.N.Y. 2009)...10 In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 376 (S.D.N.Y. 2002)...3, 4 Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., 450 F.3d 100 (2d Cir. 2006), aff d No CV, 2008 WL (2d Cir. Oct. 20, 2008)...8 Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000)...3 RULES CPLR CPLR CPLR , 2 - iii -

5 Defendant GeoInvesting, LLC ( GeoInvesting ) respectfully submits this reply memorandum of law in further support of its motion to: (i) dismiss the First Amended Complaint (the Complaint ) of Plaintiff Sino Clean Energy, Inc. ( SCEI ) as against GeoInvesting for lack of personal jurisdiction pursuant to CPLR 3211(a)(8); or, in the alternative, (ii) dismiss SCEI s claims for common law fraud and tortious interference with business relationships for failure to state a cause of action pursuant to CPLR 3211(a)(7). PRELIMINARY STATEMENT SCEI s opposition papers do nothing to remedy the serious defects both jurisdictional and substantive of SCEI s Complaint in this case. Most importantly, SCEI s grab bag of arguments regarding personal jurisdiction all fail to get around the facts that: (i) GeoInvesting is a Pennsylvania company with no offices or other presence in New York State; and (ii) SCEI s claims in this matter have nothing to do with any of the purported contacts between GeoInvesting and New York discussed in SCEI s opposition papers. SCEI s arguments regarding both general and long-arm jurisdiction rely principally on the alleged interactivity of the GeoInvesting website, as well as GeoInvesting s short sales of SCEI stock. Unfortunately for SCEI, these exact arguments were considered and rejected by Justice Edmead in Deer Consumer Products, Inc. v. Alfred Little, Index No /2011, 2012 WL (N.Y. Sup. Ct., N.Y. Cnty. Jan. 27, 2012). 1 As held in Deer and numerous other New York decisions, a defendant cannot be subjected to personal jurisdiction in New York based on an interactive website absent evidence that the website was specifically targeted at New York residents. Id. at *7. Likewise, a defendant cannot be haled into a New York court based solely 1 In its opposition brief, SCEI even refers to the Deer litigation as an action similar to this one. Opposition at 3 n.2.

6 on the possibility that it sold or purchased shares through New York stock brokers or securities organizations. Id. at *8. Not surprisingly, SCEI never addresses the Deer court s holdings in its opposition brief. Moreover, even if such contacts could be regarded as purposeful (which they cannot), they clearly bear no substantial relationship with SCEI s claims. All of SCEI s claims arise from alleged defamatory statements included in a research report that was written in Pennsylvania, based on research conducted in China. They have nothing whatsoever to do with any rights or obligations flowing from GeoInvesting s purported relationships with any New York residents, or any dealings with New York securities organizations or vendors. Accordingly, because neither the parties nor their dispute has anything to do with New York, the Court should dismiss SCEI s Complaint as against GeoInvesting for lack of personal jurisdiction pursuant to CPLR 3211(a)(8). In addition to failing to establish personal jurisdiction over GeoInvesting, SCEI has also failed to state a valid claim for either common law fraud or tortious interference with business relationships. As set forth in GeoInvesting s moving papers, SCEI has not and cannot allege the justifiable reliance required for its fraud claim. Nor has it shown that GeoInvesting is a business competitor that has caused harm to SCEI s third-party business relationships a prerequisite for SCEI s tortious interference claim. Because both claims fail on the alleged facts (and, for that matter, are entirely duplicative of SCEI s defamation claim), the Court should dismiss the common law fraud and tortious interference claims pursuant to CPLR 3211(a)(7)

7 ARGUMENT I. THE COMPLAINT SHOULD BE DISMISSED AS AGAINST GEOINVESTING FOR LACK OF PERSONAL JURISDICTION. A. GeoInvesting Is Not Subject To General Jurisdiction In New York. For an out-of-state defendant to be subject to general jurisdiction in New York under CPLR 301, it must have business contacts with the state that are both continuous and systematic. Frummer v. Hilton Hotels Int l, Inc., 19 N.Y.2d 533, 536 (1967). Here, SCEI fails to show that GeoInvesting has any New York contacts at all, much less those that would satisfy the stringent standard that would allow GeoInvesting to be sued in New York for any reason whatsoever. See Jacobs v. Felix Bloch Erben Verlag fur Buhne Film und Funk KG, 160 F. Supp. 2d 722, 731 (S.D.N.Y. 2001). Notably, SCEI s opposition does not address any of the factors New York courts consider when deciding whether an out-of-state defendant is subject to general jurisdiction. See In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 376, (S.D.N.Y. 2002) (citing Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 98 (2d Cir. 2000)) (listing the traditional indicia as (1) whether the company has an office in the state; (2) whether it has any bank accounts or other property in the state; (3) whether it has a phone listing in the state; (4) whether it does public relations work there; and (5) whether it has individuals permanently located in the state to promote its interests. ). Instead, SCEI argues that GeoInvesting is subject to general jurisdiction on the grounds that: (i) GeoInvesting s website is interactive and accessible by New York residents; (ii) GeoInvesting has taken a short position in SCEI s stock and therefore may be assumed to have engaged in securities transactions through New York entities; and (iii) GeoInvesting distributed two press releases through a company that is headquartered in New York but also has offices in GeoInvesting s home state of Pennsylvania

8 None of these reasons, whether considered alone or in conjunction with each other, can establish general jurisdiction. 1. General Jurisdiction Cannot Be Imposed Based On The GeoInvesting Website. As set forth in GeoInvesting s moving papers, New York courts have repeatedly declined to impose general jurisdiction on a defendant based on the interactive features of an out-of-state website. In its opposition, SCEI essentially ignores the law and argues that various interactive features of GeoInvesting s website should render the company subject to suit in New York for any reason. SCEI fails, however, to identify a single feature of GeoInvesting s website that is directed to New York, as opposed to a worldwide audience. That failure is dispositive. Most courts considering the significance of internet activity for the exercise of personal jurisdiction have done so in the context of a specific, rather than general, jurisdictional analysis. Citigroup, Inc. v. City Holding Co., 97 F. Supp. 2d 549, (S.D.N.Y. 2000). Were it otherwise, every entity or individual that ran a highly interactive website from anywhere in the world could be sued for any reason in New York. In re Ski Train Fire, 230 F. Supp. 2d at 383. SCEI s arguments concerning general jurisdiction highlight the purpose behind this approach. Among the alleged interactive features that SCEI has cited including the message boards, subscriber service, user registration, user comments, and others none is specifically directed to a New York audience. In Deer, the court considered and rejected the very same argument that SCEI makes here. Like SCEI, Deer argued that Defendant Little interacts with his website s users via responses to , questions and comments, while also allowing users to post comments in reply to Defendant Little s published articles and contribute their own articles to the website blog. Deer, 2012 WL , at *7. The Deer court, like most courts considering this issue, properly - 4 -

9 analyzed the interactivity of Little s website under a long-arm not a general jurisdictional approach and found that the level of interactivity on the website was immaterial because there is no indication that Little s internet postings... which are merely accessible to anyone in New York and in the entire world were expressly targeted at anyone in New York. Id. at *7 (emphasis in original). Notably, there are no factual allegations, either in the Complaint or in the opposition papers, that Little purposefully directed its website s activity at New York. Id. The Deer court also found that because there were no alleged contacts with New York residents which would require closer evaluation, Deer s request for jurisdictional discovery regarding Little s website should be denied. Id. (internal citation and quotation omitted). Absent any evidence or specific allegations to be proven through discovery, there is nothing in this record to support a finding that Little purposefully transacted business via his website with New York residents. In the context of a section 302 (a)(1) jurisdictional inquiry, such failure is fatal. Id. (internal citation omitted). The same holds true here. Whether under a general or a long-arm jurisdictional analysis, SCEI has not and cannot point to one interactive feature of GeoInvesting s website that is directed at New York instead of to a worldwide audience. Accordingly, SCEI cannot establish general jurisdiction based on the GeoInvesting website. 2. GeoInvesting s Short Selling Activities Do Not Give Rise To General Jurisdiction In New York. New York is home to more financial institutions than any other state in the nation. According to SCEI, any party that might transact business that could eventually go through one of these institutions should be subject to general jurisdiction. SCEI s argument is, not surprisingly, completely at odds with New York law

10 SCEI cites two aspects of a hypothetical short sale that it contends should establish New York contacts: (i) GeoInvesting may have had to use a broker to facilitate the short sale, and there are a lot of stock brokers in New York; and (ii) the certificated or un-certificated evidence of ownership of shares would be held at the Depository Trust Company ( DTC ), which is headquartered in New York. Opposition at 6-7, Even if true, neither fact gives rise to general jurisdiction. As a preliminary matter, SCEI has neither shown nor alleged that GeoInvesting engaged a New York-based broker to facilitate the short sale. Instead, SCEI has merely pointed out the obvious fact that there are a large number of stock brokers working in New York. Opposition at 16. By this logic, anyone who has ever made any type of investment could be haled into the courts of New York for any reason. The Court should dismiss this position out of hand. Similarly, that GeoInvesting s shorting of SCEI stock may have worked its way through the DTC is immaterial as a matter of law. New York courts have found that a defendant is not subject to jurisdiction where it delivered stock certificates to the DTC in connection with a securities transaction. See e.g. GMS Grp., Inc. v. Sentinel Trust Co., et al., No , 1997 WL , at *4-5 (S.D.N.Y. July 23, 1997) (finding no jurisdiction over Tennessee-based trustee which delivered notes which were eventually held at DTC). SCEI s argument is analogous to saying that because a company is traded on a New York-based exchange, it is subject to jurisdiction in New York. New York courts have long rejected this argument. See, e.g., Gilson v. Pittsburgh Forgings Co., 284 F. Supp. 569, 571 (S.D.N.Y. 1968) (company is not doing business in New York simply because its shares are listed on New York-based exchange). This Court should, as well

11 3. GeoInvesting Did Not Have Contact With New York Through Its Association With PR Newswire. Underscoring the weakness of its position, SCEI also argues that GeoInvesting is subject to personal jurisdiction because it has entered into business transactions with at least one New York-based media company, PR Newswire[.] Opposition at 7 (emphasis in original). In making this argument, SCEI cites to two news releases issued by GeoInvesting and a page from PR Newswire s website that lists its headquarters as being in New York. Id. SCEI fails to mention, however, that the website also identifies offices for PR Newswire in Pennsylvania, not far from GeoInvesting s office. See Ex. 14 to Licker Aff. But even if GeoInvesting did issue press releases through a New York-headquartered vendor, that fact provides no support whatsoever for SCEI s jurisdictional argument. As SCEI itself admits, GeoInvesting s press releases were distributed to a nationwide audience on the Internet and were not in any way directed at New York residents. Opposition at 7-8. In light of this fact, the location of PR Newswire s headquarters is immaterial to the Court s analysis. See Goldstock v. Restrepo, 209 A.D.2d 378, 379 (N.Y. App. Div. 2d Dep t 1994) (affirming dismissal for lack of personal jurisdiction where defendants were alleged to have deposited checks at out-of-state branches of New York-based bank). B. No Provision Of New York s Long-Arm Jurisdiction Statute Applies To This Case. 1. SCEI Fails To Allege Facts Giving Rise To Jurisdiction Under CPLR 302(a)(1). To establish jurisdiction under CPLR 302(a)(1), SCEI must show that: (1) GeoInvesting s alleged activities in New York were purposeful ; and (2) there is a substantial relationship between the purposeful activities and the claim being asserted. Deutsche Bank - 7 -

12 Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65, 71 (2006). SCEI satisfies neither prong of this test. First, SCEI s arguments concerning the purposeful activities prong fail for the same reasons it cannot establish general jurisdiction against GeoInvesting. A plaintiff cannot establish long-arm jurisdiction against a defendant based on an interactive website where there is no indication that the website was specifically targeted at New York residents. See Deer, 2012 WL , at *7 (finding no long-arm jurisdiction over Little and noting that allegations of interactivity are insufficient to support a necessary finding that Little purposefully and knowingly interacted with New York residents or otherwise targeted New York for business. ). Similarly, SCEI cannot establish purposeful activities based on speculation about GeoInvesting s short-selling activities or its use of a press release company with offices in New York. See id. at *8 (finding no indication that Little projected himself into New York [through the short sale of Deer stock], e.g., by trading stocks directly with an employee of NASDAQ in New York or dealing directly with a New York broker ). Second, even if SCEI could meet the purposeful activities test (which it cannot), its arguments would still fail, because none of the alleged contacts on which it relies bears a substantial relationship with the claim asserted. See Best Van Lines, Inc. v. Walker, 490 F.3d 239, 251 (2d Cir. 2007) (citing Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., 450 F.3d 100, 103 (2d Cir. 2006), aff d No CV, 2008 WL (2d Cir. Oct. 20, 2008) (internal citation and quotation omitted)). [W]here the [plaintiff s] claim did not arise from the defendants specific business transactions in New York, personal jurisdiction is lacking. Id. (internal citation omitted). Here, SCEI s claims are all based on alleged defamatory statements included in a report which GeoInvesting prepared in Pennsylvania, concerning the Chinese - 8 -

13 operations of a Nevada company. The fact that GeoInvesting s website is available in New York (as well as in every other part of the world with Internet access) has no bearing at all on the facts relevant to liability. The same applies to the supposed short-selling and PR activities discussed in SCEI s opposition brief. 2 Because the claims SCEI asserts do not arise from those contacts, they cannot serve as the basis for long-arm jurisdiction. Accordingly, because SCEI has failed to demonstrate any purposeful activity by GeoInvesting that bears any relationship to the claims at issue in this case, its jurisdictional arguments under CPLR 302(a)(1) fail as a matter of law. 2. CPLR 302(a)(2) Cannot Apply Because it Expressly Exempts Defamation Claims. SCEI s arguments under CPLR 302(a)(2) also fail as a matter law. First and foremost, CPLR 302(a)(2) expressly exempts defamation claims. CPLR 302(a)(2). Here, all of SCEI s claims are based on alleged misrepresentations concerning SCEI s Chinese operations. These are precisely the kinds of claims that New York has determined should not give rise to jurisdiction based on the tort theories SCEI advances here. See Legros v. Irving, 38 A.D.2d 53, 55 (N.Y. App. Div. 1st Dep t 1971) (noting that New York specifically exempts defamation claims from CPLR 302(a)(2) to avoid unnecessary inhibitions on freedom of speech or the press ) (internal citation and quotation omitted). Not surprisingly, SCEI fails to address this portion of the statute in its opposition papers. Even absent the above exclusion, SCEI s 302(a)(2) argument would fail on the alleged facts. The report at issue in this case was undisputedly prepared in Pennsylvania, based on 2 Neither of the two PR Newswire releases cited by SCEI concern either SCEI or the April 26 report. Opposition at

14 research conducted in China. See Am. Compl., Although SCEI argues that the entire scheme supposedly touched New York, that argument has no factual or logical support. See Opposition at 19. Having failed to establish either general or long-arm jurisdiction under any theory, SCEI s Complaint should be dismissed as against GeoInvesting under CPLR 3211(a)(8). C. The Court Should Deny SCEI s Request for Jurisdictional Discovery. Recognizing its failure to identify any material contacts between this case and New York, SCEI asks that it be allowed jurisdictional discovery before its Complaint is dismissed. The Court should deny SCEI s request. To be entitled to jurisdictional discovery, a plaintiff must make a threshold showing that there is some basis for the assertion of jurisdiction. Royalty Network, Inc. v. Dishant.com, LLC, 638 F. Supp. 2d 410, 425 (S.D.N.Y. 2009). [S]heer speculation, which is all SCEI has provided here, is not enough. Fantis Food, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317, 327 n.4 (1980). Critically, although SCEI repeatedly asserts that it is entitled to jurisdictional discovery, at no point does it suggest how discovery could aid in this Court s jurisdictional inquiry. Royalty Network, 638 F. Supp. 2d at 425. It is well settled that a plaintiff cannot put [a] defendant through the costly process of discovery, even discovery limited to jurisdictional matters, simply because it thinks that it can probably show significant contact with the state of New York if discovery were to proceed. Bellepointe, Inc. v. Kohl s Dep t Stores, 975 F. Supp. 562, 565 (S.D.N.Y. 1997); see also Daval Steel Prods. v. M.V. Juraj Dalmatinac, 718 F. Supp. 159, 162 (S.D.N.Y. 1989) ( The mere commencement of a lawsuit, without the support of a

15 threshold showing of jurisdictional prerequisites, should not entitle the party to use the court processes to attempt to find support for having commenced the litigation. ). Confronted with similar arguments, the Deer court declined to allow the plaintiff to proceed to jurisdictional discovery, finding that Deer has made no such threshold showing which would warrant further jurisdictional discovery[.] 3 Deer, 2012 WL , at *7. SCEI has likewise failed to make the requisite showing, and the Court should deny SCEI s request for costly and time-consuming jurisdictional discovery. 4 II. SCEI S CLAIMS FOR FRAUD AND TORTIOUS INTERFERENCE WITH BUSINESS RELATIONSHIPS SHOULD BE DISMISSED FOR FAILURE TO STATE A CAUSE OF ACTION. A. SCEI s Fraud Claim Must Be Dismissed Because SCEI Fails To Allege Reliance On Any Alleged Misrepresentation By GeoInvesting. To state a claim for common law fraud under New York law, a plaintiff must allege: (i) that the defendant made a misrepresentation or material omission; (ii) that the defendant made the misrepresentation or material omission for the purpose of inducing the plaintiff to rely on it; (iii) that the plaintiff justifiably relied on it; and (iv) that the plaintiff suffered an injury. See Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421 (1996) (reciting elements of a common law fraud claim). In its moving papers, GeoInvesting established that SCEI failed to allege that GeoInvesting made any statement for the purpose of inducing SCEI to rely on it or that SCEI did, in fact, rely on anything in GeoInvesting s report. Instead, SCEI alleged that its 3 The Deer court allowed discovery only concerning Little s domicile. Deer, 2012 WL , at *5. Here, it is undisputed that GeoInvesting is a Pennsylvania L.L.C. based in Skippack, Pa. 4 SCEI also requests that, should the Court grant the motion to dismiss, SCEI be given leave to replead so as to include additional jurisdictional facts in the complaint. Opposition at 18 n.6. SCEI has already had two chances to allege proper jurisdictional facts. It does not deserve and certainly is not entitled to a third bite at the apple

16 shareholders and market participants as a whole, who are not the plaintiffs in this action, relied on the statements in GeoInvesting s report. See Am. Compl., In its opposition papers, SCEI responds to the foregoing by arguing that its Complaint alleges a material omission and therefore warrants a presumption of reliance. Opposition at 21 (emphasis in original). This argument misses the point entirely. Regardless of whether GeoInvesting allegedly made material misrepresentations or material omissions, the parties that would have relied on and been harmed by such conduct would have been SCEI s shareholders, not SCEI itself. Critically, the Complaint includes no allegation that SCEI bought or sold shares based on GeoInvesting s investor reports. See Opposition at 22 (citing Basic, Inc. v. Levinson, 485 U.S. 224, ). Thus, SCEI has no basis upon which to claim that it relied on or was harmed by GeoInvesting s alleged misconduct. None of the cases cited in SCEI s opposition addresses this issue. For example, SCEI cites several decisions for the proposition that a presumption of reliance is particularly appropriate where the facts constituting the alleged fraud are solely within the defendant s knowledge. See Opposition at 22. Had SCEI suffered any cognizable damages e.g., through the sale of its own shares based on GeoInvesting s alleged misstatements or omissions then these cases might have some application here. But SCEI does not allege any such transaction, so the Court has no reason to determine whether or not a presumption of reliance applies. This warrants dismissal of SCEI s claim. B. SCEI Has Not Stated A Valid Claim For Tortious Interference With Business Relationships. In defending its claim for tortious interference with business relationships, SCEI repeatedly tries to hammer a square peg into a round hole. According to longstanding authority, this cause of action is intended to ensure that business competitors do not interfere with one

17 another s customers and other business relationships through improper means. See, e.g., Island Rehabilitative Servs. Corp. v. Maimonides Med. Ctr., 19 Misc. 3d 1108(A), at *9 (N.Y. Sup. Ct., Kings Cnty. 2008) ( The essence of the tort of tortious interference with contract is the improper frustration of contract rights by an overzealous competitor. ). Here, SCEI and GeoInvesting are not competitors, a fact which by itself warrants dismissal of the claim. See Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, (1980) (claim for tortious interference with prospective business relationships can only be asserted when the plaintiff and defendant are competitors). In addition, SCEI fails to identify any third-party business relationship with which GeoInvesting allegedly interfered. Instead, it claims that GeoInvesting interfered with SCEI s relationships with its existing shareholders [and] prospective future shareholders. 5 Am. Compl., 105. Tellingly, SCEI fails to cite any case in New York or elsewhere holding that a corporate plaintiff may pursue a claim for tortious interference with business relationships based on harms allegedly done to the company s relationship with its existing or future shareholders. Therefore, the claim should be dismissed. Finally, as with its fraud claim, SCEI s tortious interference claim is, in reality, just a repeat of its claim for defamation. Thus, the tortious interference claim cannot survive. See, e.g., Pitcock v. Kasowitz, Benson, Torres & Friedman LLP, 27 Misc. 3d 1238 (A), at *8 (N.Y. Sup. Ct., N.Y. Cnty. 2010) (dismissing claim for tortious interference with business relationships as duplicative of the defamation claim ). 5 Any allegation relating to the Company s auditors and directors is connected to defendant Little s alleged campaign, not the April 26 GeoInvesting report. See Am. Compl.,

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