In this action concerning Caesars-affiliated properties, all that remains is the first cause of action in the amended complaint (the AC) by plaintiff Caesars Entertainment Corporation (CEC) against the Second Lien Holders.^[FN1] Before the court is the Second Lien Holders' motion, as limited by the parties' stipulations,^[FN2] for dismissal of the first cause of action with prejudice for failure to state a claim. For the reasons that follow, the motion is granted.

CEC is a publicly traded Delaware corporation. Its subsidiary, former plaintiff Caesars Entertainment Operating Company, Inc. (CEOC), also is incorporated in Delaware. CEC and CEOC (collectively, Caesars), through various affiliates, own, operate, and manage casinos in the United States and have a principal place of business in Las Vegas, Nevada. Caesars is currently embroiled in multi-forum litigation with its creditors, most notably in the Court of Chancery of Delaware and the United States Bankruptcy Court for the Northern District of Illinois. See Wilmington Savings Fund Society, FSB v Caesars Entm't Corp., 2015 WL 1306754 (Del Ch Mar. 18, 2015); In re Caesars Entm't Operating Co., 526 BR 265 (Bankr ND Ill Mar. 9, 2015); see also In re Caesars Entm't Operating Co., 2015 WL 495259 (Bankr D Del Feb. 2, 2015) (determining that bankruptcy proceedings shall proceed in Illinois). Familiarity with these actions is presumed.

At issue in this action were controversies between Caesars and certain holders of its First Lien Notes (former defendant Elliott Management Corporation) and Second Lien Notes (the Second Lien Holders).^[FN3] Since the gravamen of the parties' disputes is no longer before this court, the facts recited here are limited to those pertinent to the remaining cause of action, tortious interference with prospective business relations, alleged against the Second Lien Holders. The complex structured finance issues at the heart of the parties' other lawsuits are neither legally [*2]relevant nor necessary for contextual purposes.

Caesars commenced the instant action on August 5, 2014 (see Dkt. 2 [original complaint]) and filed the AC on September 15, 2014. See Dkt. 54. The AC contained three causes of action for tortious interference with prospective business relations, declaratory judgment, and breach of contract. As a result of the parties' stipulations of discontinuance, what remains is the tortious interference claim as asserted by CEC against the Second Lien Holders.

On October 15, 2014, the Second Lien Holders moved to dismiss the AC. Prior to oral argument, Caesars offered to withdraw the first cause of action without prejudice, albeit with leave to possibly refile in one of the other pending actions.^[FN4] The Second Lien Holders refused to consent to a without-prejudice dismissal, arguing the first cause of action should be dismissed on the merits and with prejudice. This motion followed. See Dkt. 159 (6/30/15 Tr.).

III. The Alleged Defamation

Since this is a motion to dismiss, the facts recited below are taken from the AC unless otherwise indicated.

CEC's tortious interference with business relations cause of action is predicated upon defamation claims. Those defamation claims are based on four categories of communications.

The first communication occurred on March 21, 2014, when "the Second Lien Holders sent a threatening letter to [Caesars] and their respective counsel, alleging that CEC and CEOC had breached their fiduciary duties and that CEOC had decided to cede valuable assets of CEOC to affiliated entities for inadequate consideration.'" AC ¶ 95. While this letter was a private communication, CEC claims that "[a]s these defendants knew and intended, CEC was obligated to disclose their statements" in an SEC filing ^[FN5] and, therefore:

[O]n March 26, 2014, CEC reported in an 8-K that it had received a letter from a law firm acting on behalf of clients who claimed to hold second-priority secured notes of CEOC, alleging, inter alia, that CEOC's owners improperly transferred or seek to transfer valuable assets of CEOC to affiliated entities" and that the letter "includes allegations that these transactions constitute or will constitute voidable fraudulent transfers and represent breaches of alleged fiduciary duties owed to CEOC creditors," and demands "that the transactions be rescinded or terminated."

Next, Caesars alleges that:

On April 24, 2014, the legal and financial advisors for the Second Lien Holders appeared before the Louisiana Gaming Control Board (the "LGCB") and [] asserted that (a) the Four Properties Transaction ^[FN6]

The following month, "[o]n May 13, 2014, letters from counsel for the Second Lien Holders accompanied by slide decks apparently prepared by their financial advisors, were submitted to the LGCB. Both sets of submissions alleged that the sale of Harrah's New Orleans was a fraudulent transfer and urged the LGCB not to approve it." ¶ 104. "On May 19, 2014, the Second Lien Holders again appeared, through their legal and financial advisors, before the LGCB, and urged it not to approve the transfer of Harrah's New Orleans to Growth." ¶ 105. Caesars alleges that the Second Lien Holders "knew and intended that their false statements made at the LGCB hearings would be disseminated to the public through the press. The Wall Street Journal and Bloomberg obtained transcripts of the LGCB hearings and in articles dated May 28, 2014 and June 24, 2014, respectively, reported on the hearings and the false statements made by these defendants' representatives on their behalf, including their threats of litigation." ¶ 106.

Caesars alleges that the Second Lien Holders "also attempted to impede, delay, or prevent the closing of the CEOC Refinancing."^[FN7] ¶ 107. A hearing on Caesars' application for approval of the CEOC Refinancing was originally scheduled to take place before the Illinois Gaming Board (the IGB) on June 26, 2014. Id. After a June 24, 2014 Bloomberg report noted that Second Lien Holders planned to testify at the hearing, the hearing was rescheduled for July 24, 2014. Id. Then:

On July 24, 2014, counsel for the Second Lien Holders appeared at the IGB hearing and asserted to the IGB the same [allegedly] false assertions they previously made, including asserting that certain transactions entered into by CEOC were "significantly below their fair market value." The Second Lien Holders' representative urged the IGB to deny approval of the CEOC Refinancing, which he called "the endless shell game." Over the objections of [*3]these defendants, the IGB approved the CEOC Refinancing on July 24, 2014, and the transaction closed on July 25, 2014.

Finally, Caesars alleges that the Second Lien Holders "have repeatedly and maliciously threatened litigation against CEOC and CEC." ¶ 111. These threats were reported in a May 7, 2014 article in the New York Post, which stated that "David Tepper [of defendant Appaloosa Management, a Second Lien Holder] is preparing to sue Caesars Entertainment for allegedly trying to avoid paying its loans." Id. Additionally, a June 3, 2014 Debtwire article "reported that [a] litigious group of second lien [CEOC] bondholders yesterday sent Caesars Entertainment executives a stinging legal brief that spells out the group's allegation that the company violated its bond indentures." ¶ 113. Caesars, however, claims that "no Second Lien Holder sent any such document." Id.

On June 5, 2014, the Second Lien Holders served CEOC with a notice of default under the indenture, dated April 15, 2009, which governs the Second Lien notes. ¶¶ 11, 114. The next day, on June 6, 2014:

Bloomberg reported on the Notice, stating that "[t]he creditors said the company defaulted on its obligations by transferring assets, such as Bally's Las Vegas hotel, to an affiliate, and by removing the parent company's guarantee on the operating unit's debt." Bloomberg explained, "[t]he creditors' action puts Caesars on notice that, if their concerns aren't addressed, they could seek to exercise remedies under the loan documents ." Numerous news outlets, including Vegas Inc., Law360, The Wall Street Journal, Bloomberg, Jewish Business News, and The Street, also reported on the Notice.

IV. Legal Standard

On a motion to dismiss, the court must accept as true the facts alleged in the complaint as well as all reasonable inferences that may be gleaned from those facts. Amaro v Gani Realty Corp., 60 AD3d 491 (1st Dept 2009); Skillgames, LLC v Brody, 1 AD3d 247, 250 (1st Dept 2003), citing McGill v Parker, 179 AD2d 98, 105 (1992); see also Cron v Harago Fabrics, 91 NY2d 362, 366 (1998). The court is not permitted to assess the merits of the complaint or any of its factual allegations, but may only determine if, assuming the truth of the facts alleged and the inferences that can be drawn from them, the complaint states the elements of a legally cognizable cause of action. Skillgames, id., citing Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977). Deficiencies in the complaint may be remedied by affidavits submitted by the plaintiff. Amaro, 60 NY3d at 491. "However, factual allegations that do not state a viable cause of action, that consist of bare legal conclusions, or that are inherently incredible or clearly contradicted by documentary evidence are not entitled to such consideration." Skillgames, 1 AD3d at 250, citing Caniglia v Chicago Tribune-[*4]New York News Syndicate, 204 AD2d 233 (1st Dept 1994). Further, where the defendant seeks to dismiss the complaint based upon documentary evidence, the motion will succeed only if "the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law." Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 (2002) (citation omitted); Leon v Martinez, 84 NY2d 83, 88 (1994).

V. Discussion

"Defamation is the making of a false statement about a person that tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him [or her] in the minds of right-thinking persons, and to deprive him [or her] of their friendly intercourse in society.'" Frechtman v Gutterman, 115 AD3d 102, 104 (1st Dept 2014), quoting Rinaldi v Holt, Rinehart & Winston, Inc., 42 NY2d 369, 379 (1977). "To prove a claim for defamation, a plaintiff must show: (1) a false statement that is (2) published to a third party (3) without privilege or authorization, and that (4) causes harm, unless the statement is one of the types of publications actionable regardless of harm [defamation per se]." Stepanov v Dow Jones & Co., 120 AD3d 28, 41-42 (1st Dept 2014) (emphasis added), citing Dillon v City of New York, 261 AD2d 34, 38 (1st Dept 1999). "A statement is defamatory on its face when it suggests improper performance of one's professional duties or unprofessional conduct." Frechtman, 115 AD3d at 104, citing Chiavarelli v Williams, 256 AD2d 111, 113 (1st Dept 1998). "Of course, only statements of fact can be defamatory because statements of pure opinion cannot be proven untrue.'" Martin v Daily News L.P., 121 AD3d 90, 100 (1st Dept 2014), quoting Thomas H. v Paul B., 18 NY3d 580, 584 (2012); see Mann v Abel, 10 NY3d 271, 276 (2008) ("Expressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action for defamation"); see generally Gross v NY Times Co., 82 NY2d 146 (1993). Additionally, CPLR 3016(a) provides that "[i]n an action for libel or slander, the particular words complained of shall be set forth in the complaint, but their application to the plaintiff may be stated generally." See BCRE 230 Riverside LLC v Fuchs, 59 AD3d 282, 283 (1st Dept 2009) (allegations "that plaintiff and/or their agents or attorneys'" made defamatory statements, without specifically identifying such statements, "and that as a result, plaintiff caused an article to be written repeating" the defamation, are insufficient to satisfy the particularity requirement of CPLR 3016(a)).

The Second Lien Holders argue that their statements made in connection with the hearings before the LGCB and the IGB (collectively, the Regulatory Hearings) are not actionable because defamation claims predicated on such statements are barred by New York's anti-SLAPP (Strategic Lawsuit Against Public Participation) statute and the Noerr-Pennington doctrine. New York's anti-SLAPP rule, codified as Civil Rights Law § 76-a(2), provides:

In an action involving public petition and participation, damages may only be recovered if the plaintiff, in addition to all other necessary elements, shall have established by clear and convincing evidence that any communication which gives rise to the action was made with knowledge of its falsity or with reckless disregard of whether it was false, where the truth or falsity of such communication is material to the cause of action at issue.

[A]n action, claim, cross claim or counterclaim for damages that is brought by a public applicant or permittee, and is materially related to any efforts of the defendant to report on, comment on, rule on, challenge or oppose such application or permission.

"§ 76-a was passed to protect citizens facing litigation arising from their public petitioning and participation by deterring strategic lawsuits against public participation, termed SLAPP suits." Southampton Day Camp Realty, LLC v Gormon, 118 AD3d 976, 977 (2d Dept 2014) (citations omitted). "A finding that an action is a SLAPP suit entails serious consequences to the plaintiff: a heightened standard of proof is imposed upon the plaintiff to avoid dismissal of the action; where the action is one for defamation, an actual malice standard is imposed." Guerrero v Carva, 10 AD3d 105, 116 (1st Dept 2004) (citation omitted). Additionally, CPLR 3211(g) further provides that "[a] motion to dismiss under [CPLR 3211(a)(7)] in which the moving party has demonstrated that [a claim qualifies as] an action involving public petition and participation as defined in [§ 76-a], shall be granted unless the party responding to the motion demonstrates that the cause of action has a substantial basis in law or is supported by a substantial argument for an extension, modification or reversal of existing law."

The court need not reach the issue of whether the allegations regarding the Regulatory Hearings meet the heightened pleading standards of § 76-a.^[FN8] The claims based on these allegations are dismissed on the merits, with prejudice, because they are barred by the Noerr-Pennington doctrine,^[FN9] pursuant to which "parties may not be subjected to liability for petitioning the government." I.G. Second Generation Partners, L.P. v Duane Reade, 17 AD3d 206, 208 (1st Dept 2005). "Under the Noerr-Pennington doctrine, civil actions are barred where the activity challenged under federal statute or state law consists of petitioning legislatures, administrative bodies, and the courts,' even if the defendant's actions had an anticompetitive or otherwise injurious purpose or effect.'" Tuosto v Philip Morris USA Inc., 2007 WL 2398507, at *5 (SDNY 2007) (emphasis added), quoting Hamilton v Accu-tek, 935 FSupp 1307, 1316-17 (EDNY 1996) (Weinstein, J.); see generally Mosdos Chofetz Chaim, Inc. v Village Of Wesley Hills, 701 FSupp2d 568, 594-95 (SDNY 2010) (collecting cases). Both the First and Second Departments have expressly held that the Noerr-[*5]Pennington doctrine applies to common law tort claims. See Concourse Nursing Home v Engelstein, 278 AD2d 35 (1st Dept 2000) ("Although the Noerr-Pennington doctrine initially arose in the antitrust field, the courts have expanded it to protect First Amendment petitioning of the government from claims brought under Federal and State law, including claims asserted pursuant to 42 USC § 1983 and common-law tortious interference with contractual relations."), quoting Alfred Weissman Real Estate v Big V Supermarkets, 268 AD2d 101, 107 (2d Dept 2000); cf. LightSquared Inc. v Deere & Co., 2014 WL 345270, at *4 (SDNY 2014) (noting that "[t]he Second Circuit has yet to decide whether the Noerr-Pennington doctrine ... must be applied mechanically in cases outside the antitrust area.'"), quoting Mosdos, 701 FSupp2d at 594.

The Noerr-Pennington doctrine applies here. See Icahn v Raynor, 32 Misc 3d 1224(A), at *5 (Sup Ct, NY County 2011) ("A petition of a government agency is immune from liability for tortious interference with contract by the Noerr-Pennington doctrine."), aff'd sub nom. Nineteen Eighty-Nine, LLC v Icahn Enter's L.P., 99 AD3d 546 (1st Dept 2012). Nonetheless, CEC argues that its tortious interference claim is still viable under the doctrine's "sham" exception. As explained by the Second Department:

There is a "sham" exception to the Noerr-Pennington doctrine which applies in [s]ituations in which persons use the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon. The "sham" exception to the Noerr-Pennington doctrine has an objective and subjective element. The objective element requires that the defendant's conduct must be objectively baseless with no reasonable expectation of success. The subjective element requires that the defendant act, not with the intent of influencing governmental action, but rather with the intent to interfere directly with the business relationships of a competitor. If the objective element is not satisfied, the court is precluded from examining the subjective motivation for the conduct, and the "sham" exception is not applicable.

CEC's arguments focus primarily on the second, subjective element, by averring that the Second Lien Holders' participation in the Regulatory Hearings was made in bad faith and for the purpose of interfering with CEC's business by attempting to scuttle regulatory approval of its financial transfers and restructuring.^[FN11] Even if there was merit to these contentions, CEC cannot satisfy the first, objective prong of the "sham" exception — namely, that the Second Lien Holders' conduct was objectively baseless and had no reasonable expectation of success. Under this standard, it is not enough for CEC to be in the right; the Second Lien Holders' claims must, essentially, be frivolous. The AC does not establish the frivolity of the Second Lien Holders' conduct in the Regulatory Hearings because the allegations of frivolity are pleaded in conclusory fashion. See, e.g., AC ¶ 94 (claiming Second Lien Holders were "aware of the falsity of their factual assertions and the weakness of their legal claims").

This deficiency, moreover, is not merely a pleading issue that would warrant a without-prejudice dismissal. The Second Lien Holders took the position that the challenged transactions were fraudulent transfers and without adequate consideration. The test for whether the "sham" exception applies is not whether such allegations themselves are frivolous, but whether the assertion of such claims within the Regulatory Hearings had no reasonable chance of procuring a favorable regulatory ruling. After all, it is the regulatory bodies, not the courts, that decide whether to grant CEC's applications. CEC alleges nothing to suggest that the Second Lien Holders' conduct before the LGCB and the IGB had no chance whatsoever to influence the outcome. That CEC ultimately prevailed, over the Second Lien Holders' objections, is of no moment, because establishing frivolity requires more than pointing to a favorable outcome. It is axiomatic that not all losing argument are frivolous.

As for the parties' reliance on this court's decision in Bridas Int'l S.A. v Repsol, S.A., supra, 40 Misc 3d 1229(A), such reliance is misplaced. In Bridas, the plaintiffs sought broad declaratory [*6]judgements as to the legality of contested business dealings impacted by government expropriation in Argentina, which spawned international multi-forum litigation. See id. at *1-2, 5. Additionally, the plaintiffs asserted a tortious interference cause of action predicated on claims made in a prior pending litigation between the parties in Spain. See id. at *6-7. As here, the defendant raised a Noerr-Pennington defense. See id. at *7. Ruling in defendant's favor, this court refused to apply the "sham" exception because doing so would have required this court to declare the Spanish action to be "objectively baseless" and "would be tantamount to calling the Spanish Action a sham.'" See id.

Here, in contrast, the subject tortious interference claim is not predicated on the validity of the parties' pending litigation in Delaware and Illinois. While the underlying merits of those lawsuits concern claims the Second Lien Holders made during the Regulatory Hearings, the applicability of the "sham" exception turns not on the likelihood that such claims will be found deficient within the Delaware and Illinois actions, but rather on whether such claims were frivolous in the context of the Regulatory Hearings. CEC does not plead any facts to suggest that the Second Lien Holders had no reasonable chance of successfully persuading the LGCB and the IGB to deny CEC's applications. Conclusory assertions are not sufficient to meet its burden.

CEC's defamation claims predicated on communications made by the Second Lien Holders directly to CEC — the March 21, 2014 letter and subsequent litigation threats — are equally infirm. The letter cannot support a defamation claim because the Second Lien Holders did not disseminate it to a third party. Rather, the letter was made public when CEC made its contents known in an SEC filing. CEC's argument that the letter is actionable under a "compelled self-publication"^[FN12] theory is unavailing because the First Department has rejected this theory.^[FN13] See Wieder v Chemical Bank, [*7]202 AD2d 168, 170 (1st Dept 1994), citing Weintraub v Phillips, Nizer, Benjamin, Krim, & Ballon, 172 AD2d 254, 255 (1st Dept 1991); see also Phillip v Sterling Home Care, Inc., 103 AD3d 786, 787 (2d Dept 2013) ("New York does not recognize defamation via compelled self-publication."); see also Naderi v N. Shore-Long Island Jewish Health Sys., 2014 WL 840417 (Sup Ct, NY County 2014) (Kern, J. ) (same).