From today's opinion in Trump Media & Technology Group Corp. v. WP Co. LLC, decided by Judge Tom Barber (M.D. Fla.):
This lawsuit for defamation by Plaintiff Trump Media & Technology Group Corp. ("TMTG") against Defendant WP Company LLC (the "Post") arises from an article titled "Trust linked to porn-friendly bank could gain a stake in Trump's Truth Social," published by the Post on May 13, 2023, and circulated on Twitter (now known as "X") by Post personnel. The article described events related to a contemplated merger between TMTG and Digital World Acquisition Corp. ("DWAC") as part of taking TMTG's "Truth Social" business public.
The article noted there had been a delay in obtaining SEC approval for the merger, which supporters of former President Donald Trump and TMTG attributed to political bias. The article offered an alternative explanation: concerns over a loan or loans obtained by TMTG, the identities of the lenders, and whether those loans had been properly disclosed by DWAC in its public filings. The article cited various sources for its story, including "internal documents a company whistleblower has shared with federal investigators and [the Post]" and statements expressly attributed to the whistleblower, former TMTG officer Will Wilkerson.
The article related that in late 2021, with the proposed merger "frozen" and TMTG concerned about paying its bills, DWAC president Patrick Orlando announced he had arranged for $8 million in loans from an entity known as "ES Family Trust." According to the article, the loans were part of a deal in which TMTG would receive the loans, and in exchange, ES Family Trust would acquire an equity interest in the public entity to be formed from the merger of TMTG and DWAC. This loan-for-stock deal was reflected, according to the article, in a convertible promissory note, although the article acknowledged that the only copy of the note the Post had been able to locate was unsigned. The article also reported that some of the funds were wired by another entity, Paxum Bank, which had ties to ES Family Trust and to the adult film industry. Also, according to the article, TMTG paid a finder's fee of $240,000 in connection with the loans to Entoro Securities, a Texas entity of which Orlando was a managing director.
The article stated that neither the loan-for-stock deal nor the finder's fee had been disclosed to shareholders of DWAC or the SEC, and that New York University law professor Michael Ohlrogge opined that these matters could affect the value of the shares and should have been disclosed. The article also noted that the British journal The Guardian had earlier reported that federal prosecutors in New York were investigating whether TMTG violated money laundering statutes in connection with these loans, and that TMTG Chief Executive Officer Devin Nunes filed a lawsuit against Wilkerson and others (including The Guardian) asserting that the Guardian story was "fabricated."
TMTG sued for libel, but the court concluded that it hadn't adequately alleged knowing or reckless falsehood (so-called "actual malice"), though it concluded that the matter was close as to some allegations, and allowed plaintiff to file an amended complaint that could provide such allegations (assuming there was a plausible basis for them).
The court also discussed the Post's "neutral reporting privilege" argument, and partly accepted it but partly rejected it:
