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Ratheal v. McCarthy

United States District Court, D. Utah, Central Division

August 31, 2018

RODNEY S. RATHEAL, Plaintiff,
v.
LINDSAY McCARTHY, SEC; TOM HARVEY, THE SALT LAKE TRIBUNE, Defendants.

          Judge Dale A. Kimball

          REPORT AND RECOMMENDATION: THE SALT LAKE TRIBUNE AND TOM HARVEY'S MOTION TO DISMISS (ECF NO. 16)

          EVELYN J. FURSE, UNITED STATES MAGISTRATE JUDGE.

         Pro se Plaintiff Rodney S. Ratheal initiated this case on September 5, 2017, (Compl., ECF No. 1), and subsequently filed two Amended Complaints, which are substantially the same as the original Complaint. (See Am. Compl., ECF No. 8; 2d Am. Compl., ECF No. 39.)[1]

         Mr. Ratheal asserts a defamation claim against Defendants The Salt Lake Tribune (“Tribune”) and Tom Harvey (collectively, the “Tribune Defendants”) relating to an article the Tribune published in December 2012. The Complaint also includes misrepresentation claims against the Securities & Exchange Commission (“SEC”) and Lindsay McCarthy (collectively, the “SEC Defendants”) arising out of an investigation the SEC conducted into Mr. Ratheal and his company Premco Western, Inc. (“Premco”) and the subsequent settled civil action that the SEC initiated against Mr. Ratheal and Premco in December 2012. The District Judge dismissed Mr. Ratheal's claims against the SEC and Mr. McCarthy on Mr. Ratheal's Motion. (ECF No. 61.)

         The Tribune Defendants move the Court[2] to dismiss Mr. Ratheal's defamation claim against them pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) on the grounds that the statute of limitations bars the claim and that the article at issue makes truthful and privileged statements. (Mot. to Dismiss & Mem. in Supp. of Mot. (“Tribune Mot.”), ECF No. 16.)

         For the reasons addressed below, the undersigned RECOMMENDS the District Judge GRANT the Tribune Defendants' Motion and DISMISS Mr. Ratheal's claims as time-barred.

         BACKGROUND

         The Complaint's allegations arise out of an SEC investigation and civil suit filed against Mr. Ratheal and his company Premco, Securities and Exchange Commission v. Premco Western, Inc. et al. (“SEC v. Premco”), 2:12-cv-01120-BSJ (D. Utah), as well as online postings and an article published online regarding that case. (See Compl., ECF No. 1.) In SEC v. Premco, filed December 10, 2012, the SEC alleged that from June 2001 to April 2012, Mr. Ratheal, the sole owner, president, and CEO of Premco, raised $4.1 million from investors through the fraudulent and unregistered sale of undivided fractional working interests in two oil and gas wells along the Utah/Arizona border. (Premco Compl., ¶¶ 1, 2, 13 & 15, SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 2.) The SEC further alleged that Mr. Ratheal made various misrepresentations and omissions to investors, including failing to disclose that the wells were “dry, ” or without oil and gas. (Id., ¶¶ 3, 4, 64-85.) The SEC also asserted that Mr. Ratheal misappropriated investor funds to cover his personal living expenses. (Id., ¶¶ 5, 84-85.)

         On the same day the SEC filed the complaint, Mr. Ratheal and Premco, without admitting or denying the complaint's allegations, consented to entry of final judgments enjoining them from committing future securities violations, requiring them to pay disgorgement and prejudgment interest totaling $7, 372, 259.16, and acknowledging that the court would not impose civil penalties or require payment of the $7, 372, 259.16 given their sworn representations regarding their financial conditions. (Premco Consent to Entry ¶ 2, SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 4; Ratheal Consent to Entry ¶ 2, SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 5.) Mr. Ratheal and Premco further agreed to waive factual findings and not to take any action challenging the allegations in the SEC's complaint. (Premco Consent to Entry ¶¶ 4, 11, SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 4; Ratheal Consent to Entry ¶¶ 4, 11, SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 5.) On December 17, 2012, the court entered final judgments against Mr. Ratheal and Premco. (Premco Final J., SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 8; Ratheal Final J., SEC v. Premco, 2:12-cv-01120-BSJ, ECF No. 9.)

         On December 11, 2012, the SEC published on its website a litigation release summarizing the allegations in the SEC v. Premco complaint and the terms of the entry of final judgment to which Mr. Ratheal and Premco agreed. (SEC Litig. Release No. 22556 (Dec. 11, 2012), available at: https://www.sec.gov/litigation/litreleases/2012/lr22566.htm (last visited Aug. 29, 2018)). Also on December 11, 2012, the Tribune published an article written by Tom Harvey that reported on the recently filed SEC v. Premco case. (Salt Lake Tribune, “SEC Sues St. George company for selling shares in dry oil wells” (Dec 11. 2012), Ex. A, Tribune Mot., ECF No. 16.)

         In his Complaint in this case, Mr. Ratheal asserts that the SEC's online litigation release resulted in the December 11, 2012 Tribune article, that the Tribune and Mr. Harvey failed to perform due diligence with respect to the article, and that they failed to retract the defamatory article even after he made a request that they do so. (Compl. ¶ 9, ECF No. 1.)

         Mr. Ratheal claims damages for lost earnings over the past seven years and mental anguish over the loss of his personal and professional reputations. (Compl. 3, ECF No. 1.) He seeks monetary damages and injunctive relief from the Court, including ordering the Tribune to remove the allegedly defamatory statements from the internet. (Id.)

         On September 5 and 11, 2017, Mr. Ratheal filed returned summonses indicating that he served all defendants, (ECF Nos. 2, 3 & 4), and filed an errata clarifying he sought $250, 000, 000.00 in damages. (Errata, ECF No. 5.) On September 13, 2017, the Court ordered Mr. Ratheal to effectuate proper service since he cannot personally serve the defendants and to file an amended complaint to correct the amount of damages sought. (Order for Pl. to Effectuate Proper Service & Abide by the Fed. R. Civ. P., ECF No. 7.) On September 22, 2017, Mr. Ratheal filed an Amended Complaint that corrected the amount of damages sought to $250, 000, 000.00 and made a few other typographical changes. (Am. Compl., ECF No. 8.) The Defendants and substance of the Amended Complaint remained unchanged from the original Complaint Mr. Ratheal filed. (See id.) Mr. Ratheal also filed returned summonses indicating that he had served the Tribune and Mr. Harvey. (ECF Nos. 13.)

         On September 28, 2017, the Tribune Defendants filed a motion to dismiss Mr. Ratheal's claims against them. (Tribune Mot., ECF No. 16.) Mr. Ratheal filed an opposition memorandum on October 9, 2017, [3] (Mot. to Deny Defs.' Mot to Dismiss Salt Lake Tribune & Tom Harvey (“Opp'n to Tribune Mot.”), ECF No. 21), and the Tribune Defendants filed a reply memorandum on October 23, 2017, (Reply Mem. in Supp. of Mot. to Dismiss (“Tribune Reply”), ECF No. 25). Without seeking leave of court, Mr. Ratheal submitted an additional filing attempting to supplement the briefing on the Motion to Dismiss, (Mot. to Deny Defs.' Mot. to Dismiss (Re: Harvey, Salt Lake Tribune), ECF No. 28), which the Court rejected in its November 3, 2017 Order. (Order Denying Mot. to Deny Defs. Mot. to Dismiss (Re: Harvey, Salt Lake Tribune), ECF No. 29.) In that Order, the Court indicated that the briefing on the Tribune Defendants' Motion to Dismiss was closed and that the Court would consider the memoranda permitted under DUCivR 7-1 in deciding the Tribune Defendants' Motion to Dismiss. (Id.)

         Also on December 29, 2017, without seeking leave of court, Mr. Ratheal filed a second Amended Complaint. (2d Am. Compl., ECF No. 39.) The second Amended Complaint makes minor typographical changes, but again the Defendants and substance remained unchanged from the prior iterations of the complaint. (See id.) On January 2, 2018, the Tribune Defendants filed a response to the second Amended Complaint and renewal of their motion to dismiss. (Response to Pl.'s Am. Compl. & Renewal of Mot. to Dismiss, ECF No. 40.) The Tribune Defendants noted that Mr. Ratheal did not obtain leave to file the second Amended Complaint and that, in any event, the substance of the allegations against them did not change. (Id. at 1-2.) Accordingly, they renewed their previously filed Motion to Dismiss and requested that the Court consider the Motion to Dismiss as asserted against the second Amended Complaint, as well. (Id. at 2.) On January 29, 2018, Mr. Ratheal filed a renewal of his opposition to the Tribune Defendants' Motion to Dismiss, acknowledging that the substance of the second Amended Complaint remained the same and claiming that he only made typographical changes to the SEC's name in the second Amended Complaint to comply with the Clerk of Court's December 29, 2017 Order. (Renewal of Mot. to Deny Defs.' Harvey/Tribune Mot. to Dismiss, ECF No. 50.) The Tribune Defendants responded to Mr. Ratheal's notice once again stating that the second Amended Complaint does not change substance of the allegations against them and requesting that the Court consider their previously filed Motion to Dismiss as asserted against Mr. Ratheal's recent filings. (Resp. to Pl.'s Recent Filings on Mot. to Dismiss, ECF No. 51.)

         LEGAL ...


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