Court File and Parties

Court File No.: CV-23-00697590-0000 Date: 2023-05-09 Superior Court of Justice - Ontario

Re: Adam Jacobs and Mitchell Cohen, Plaintiffs – and – Regan McGee a.k.a. Harry Plum, Defendant

Before: E.M. Morgan J.

Counsel: Eric Morgan, and Alexis Beale, for the Plaintiffs Justin Nasseri, Helen Richards, and Gordon Vance, for the Defendant Charlie White, for the Third Parties, Paul Teitleman and Paul Teitleman Seo Consulting

Heard: May 8, 2023

Motion for Norwich Order

[1] The Plaintiffs bring a short motion seeking a Norwich order on an urgent basis.

[2] On its face, the present motion is brought, like most Norwich motions, at the outset of the action and as the Plaintiff’s first shot out of the canon at the Defendant. Likewise, like most Norwich motions, it is presented as an urgent matter, with ongoing harm that will not cease unless and until the wrongdoers are quickly unearthed and the Plaintiffs can fully plead their case to put an end to the wrongful conduct.

[3] But all is not what it seems.

[4] The Plaintiff, Adam Jacobs (“Jacobs”), is the sole affiant in support of the motion. He is the former head of payments and banking at the now collapsed FTX Cryptocurrency Derivatives Exchange. He claims that he has been defamed and that his privacy has been invaded by certain internet postings and activities, presumably by the Defendant and/or others, in a way that is harmful to his business reputation. He brings this motion in order to unearth the details of those postings and to discover who is really behind them.

[5] Jacobs, along with the Plaintiff, Mitchell Cohen (“Cohen”), is currently also engaged in complex commercial litigation with Nobul Technologies Inc. (“Nobul”), a tech start-up company, in respect of their roles as directors of Nobul. That action was commenced by Nobul against Jacobs and Cohen, among other defendants, by Statement of Claim issued January 20, 2023 as Court File No. 23-CV-00693289 (the “Nobul action”). It has been defended and is proceeding in Commercial List as what can fairly be described as a hotly contested piece of litigation. The Defendant, Regan McGee (“McGee”), is the CEO of Nobul and is, in effect, the adverse party to Jacobs and Cohen in the Nobul action.

[6] For a short afternoon-only hearing in motions court, the materials are rather voluminous, and for good reason as the issues between the parties are complex. There is a motion record and supplementary motion record of over 400 pages, a cross-motion by the Defendant to strike out certain paragraphs of the Jacobs affidavit, a nearly 300-page compendium by the Defendant, transcripts of cross-examinations, a factum, responding factum, and reply factum, etc. Given that type of contained, discreet issues that one typically sees on the short motion list, this is an unusual case. It is more reminiscent of a full-blown summary judgment motion, with evidence and argument addressed to all of the multi-faceted and detailed allegations and cross-allegations that have emerged between the parties.

[7] Defendant’s counsel describes the present action as an offshoot of the Nobul action, and as a pressure tactic more related to the animosity that has developed between the Nobul action parties than it is to any independent claim of defamation or inclusion against seclusion. Reading the material filed, which requires one to come to grips with the business relationship between the parties, it is hard not to agree with that characterization.

[8] There is certainly more animosity between the parties than one would expect in a Norwich motion in which the moving party claims to simply be seeking information on an alleged harm about which he knows little, including the identity of the person or persons lying behind it. In this context of personal animosity, Jacobs presents as a piece of “evidence” that McGee did not dignify him with an answer when he accused him off the record of being the person posting the offending material on the internet.

[9] Plaintiffs’ counsel are explicit about the personal animosity between the parties. They impugn McGee at paragraph 11 of their factum for observing the zoom cross-examination of Jacobs “with his camera off”. They then go on to relate that “[t]he only evidence from Mr. McGee’s mouth in this entire record is during Mr. Jacob’s cross-examination, when Mr. McGee was inadvertently unmuted and gleefully blurted out (presumably to an unknown person or persons watching with him behind his black square screen) ‘He’s squirming so much’ referring to Mr. Jacobs, as if the cross-examination were a form of entertainment.”

[10] McGee’s Statement of Defence in the Nobul action was served April 5, 2023. The present action was commenced on April 6, 2023. The Plaintiffs served this motion on McGee and the third-party respondents on April 25, 2023, and appeared the next day in motions court on an urgent basis for a 30-minute hearing. Their communication with the court’s motions office indicated, somewhat surprisingly given the ongoing litigation between the same parties, that they expected the motion to be unopposed:

We attach the Notice of Motion here and we note that all interested persons and parties have notice and will be formally served once a hearing date has been assigned. As of this time, we have no reason to expect that the motion will be opposed.

[11] McGee’s counsel are of the view that the Plaintiffs in fact had every reason to expect that the motion would be opposed. The parties are involved in ongoing litigation that has been contentious and aggressively fought at every step. The only reason the Plaintiffs would have had “no reason to expect that the motion will be opposed” would have been that the motion was served on the Defendant with less than 24 hours’ notice – i.e. not that the Defendant would not oppose, but perhaps that they could not respond.

[12] In any case, the Plaintiffs claimed there was great urgency to the motion. The Defendant sought an adjournment. Since the Defendant is, according to the Notice of Motion, engaged in “egregious and unlawful conduct” and “[t]here is a risk of destruction of evidence”, the matter was adjourned and made returnable after the lunch break in motions court barely two weeks hence. In the meantime, the parties all consented to a preservation order.

[13] As it turns out, there is nothing urgent about this matter. It is even debatable whether there is any valid damages claim at all, although that determination will have to wait until after discovery is complete and the matter can be determined on its merits in either a trial or summary judgment motion. But what is clear to me is that there is nothing to distinguish this claim from every other claim where the evidence is produced by each side in their respective affidavits of documents and examinations or discovery. The extraordinary remedy of pre-discovery searches and production orders that are entailed in a Norwich proceeding is not appropriate here.

[14] In the first place, one of the two causes of action pleaded – intrusion upon seclusion – is put forward in novel circumstances that will need further elaboration by the courts if it is to be recognized as a version of that tort. I understand that my colleague Justice Perell, in a preliminary motion, has suggested that similar conduct may fit this invasion of privacy type of tort, although there is as yet no appellate or definitive ruling on the subject: Mizzi v. Cavanagh, 2021 ONSC 1594. I would stress that here, unlike in Mizzi, there is no further evidence of harassment, intimidation, or similarly oppressive conduct associated with the domain name acquisition. The domain names here are dormant; nothing has been posted on them or done with them, and no one has referred to them in any context to obtain an advantage from the Plaintiffs.

[15] Jacobs contends that someone – speculatively, McGee or a related party – purchased an internet domain name in the names adamcolejacobs.com and mitchellcohen.com. Jacobs concedes that the names were available for sale, and that neither he nor his co-Plaintiff, Mitchell Cohen (“Cohen”), had purchased the names themselves or registered any such names in order to protect them. He also concedes that the domain names have never been used by the purchaser or anyone else, and that nothing harmful or otherwise has ever been posted or published on them.

[16] The Plaintiffs plead that the purchase of domain names, without more, amounts to an intrusion against seclusion. As indicated, there is precious little precedent for that claim, although I need not ruling on its existence. I will say, however, that even assuming that there is a cause of action to be made out, a bare cause of action in tort, without causing actual harm, is not the type of matter on which an urgent Norwich order would be granted.

[17] A Norwich order is a powerful tool, to be used sparingly and only where necessary. There must be something more than a desire by the Plaintiff to get information that might or might not turn out to be useful in the lawsuit. As the Court of Appeal put it in GEA Group v. Flex-N-Gate Corporation, 2009 ONCA 619, at para 83, “pre-action discovery is rare and extraordinary discretionary relief. It is not intended nor should it be permitted to serve as a substitute for the normal discovery regime mandated by the Rules of Civil Procedure.”

[18] As for the Plaintiffs’ defamation claim, there is not much to that either. Jacobs complains about three articles published online by an unknown author under a pseudonym (which he presumes is McGee). He concedes that the articles have been taken down and are no longer accessible. He has not found them reprinted or otherwise reproduced elsewhere. What he argues is that the articles were accessed by others for the time that they were available online, and could potentially be the source of information that others publish.

[19] As the one and only example of this potential harm to his reputation, Jacobs mentions in his affidavit a recent article critical of him and his company published in April 2023 in a short-seller report produced by Spruce Point Capital Management (“Spruce Point”). In his affidavit, Jacobs asserts that, “reliance by a short-seller on the Articles has caused damage to my reputation with my employer and has caused indirect damage to me by providing fodder for negative commentary about my employer. Thus, the risk of damage caused by the Articles is not speculative.”

[20] Counsel for McGee points out that the same Spruce Point publication has been issuing reports critical of Jacobs and his company for the past two years – i.e. since well before publication of the impugned three articles. The edition of the report that Jacobs complains about did reference the three articles in one passage by appending a link to them, but Jacobs also concedes that there is no evidence connecting McGee to Spruce Point.

[21] Since the articles have been taken down from the internet, the hyperlink contained in the short-seller report is broken and the articles cannot be accessed. It seems evident that the harm supposedly caused by the Spruce Point publication’s reference to the three articles is greatly exaggerated by Jacobs; and it is certain that the ongoing harm feared by him due to the reference to the three articles is as non-existent as the articles themselves. It also is noteworthy that Spruce Point has not been named in the Plaintiffs’ defamation suit for repeating a libel; only McGee has been named for potentially being an indirect source of a repeated libel. In my view, it is only by understanding the broader context of the ongoing Nobul action that one can rationally explain this situation.

[22] Finally, counsel for McGee argues that Jacobs has come to a court for equitable relief without having clean hands himself. They submit that courts can and should “deny relief when the claimant’s wrongdoing taints the appropriateness of the remedy being sought from the court”: Royal Bank of Canada v. Boussoulas, 2012 ONSC 2070 at para. 51 (Div Ct).

[23] In support of this argument, McGee has produced copies of emails between Jacobs and potential witnesses – the freelance authors who he has identified as authors of some or all of the impugned three articles. Those emails show Jacobs alternatively offering money to the authors, who are located in India and Pakistan, and threatening to sue them. Counsel for McGee describes this carrot and stick approach as an improper effort to influence witnesses. Jacobs was evasive in even admitting that he sent the emails several weeks ago, while counsel for Jacobs refused to allow his client to answer any further questions about the emails, claiming privilege.

[24] I would have to know more about the full context of these communications before concluding whether or not they are improper as alleged. But it is clear to me that Jacobs is reaching for information in an aggressive way up front in this litigation instead of waiting for the full discovery process to play itself out. And he is doing so without proffering any real reason for the aggressive approach.

[25] Although Plaintiffs’ counsel analogizes this to one of my own Norwich order rulings in which I authorized disclosure of information from the defendant’s bank accounts: Carbone v. Boccia, 2022 ONSC 6528. There, the plaintiffs knew who they were suing, whereas here Plaintiffs’ counsel concedes that they do not know if they are even suing the right party. This is far closer to a fishing expedition than the standard Norwich ruling where the claimant seeks information about the target’s evidence, not the identity of a target whom they have taken the liberty of already naming rather than calling the defendant John Doe: see Harrington Global Opportunities Fund v. Investment Industry Regulatory Organization, 2018 ONSC 7739.

[26] In Carbone and similar cases, if the plaintiffs are wrong they will come up with none of the defendant’s documents but will be no further behind or ahead. In the present case, if the Plaintiffs are wrong, they will have put the Defendant through a litigious ordeal when he is an innocent and uninvolved party. That, in turn, will likely impact on the pressure felt in the Nobul action between the same parties (albeit in McGee’s corporate position).

[27] In the record before me, there is no suggestion that potential witnesses will be disappearing (except for the hint in the email exchange that Jacobs himself has been trying to silence them). It is not suggested that McGee and his assets are fleeing the jurisdiction, and there is no actual evidence that any information that is relevant to the litigation is disappearing or fleeing the jurisdiction. As discussed above, there is also no real evidence that the information alleged to be libelous is being further published or distributed.

[28] Counsel for McGee contend that the action, and in particular the demand for an upfront Norwich order, is a tactical move related to the Nobul action. They suggest that this entire motion has been brought to pressure McGee not so much as Defendant here but as CEO of the plaintiff in the Nobul action. That is certainly a possible explanation for the overly zealous approach to the present action by the Plaintiffs.

[29] I do not know whether a collateral, strategic strike for the Nobul action is the entire explanation for the Plaintiffs having brought the within motion. However, given that prospect, McGee has an interest in the outcome of the motion and therefore has standing under Rule 37.07 of the Rules of Civil Procedure to have filed material and to have participated fully in it even though much of the remedy is aimed at the third-party websites and publishers: 1085459 Ontario Ltd. v. Prince Edward County (Municipality), at para 25 (SCJ).

[30] While I do not know for certain the Plaintiffs’ motivation, I do know is that the motion is not justified in the way required for a Norwich order. The Plaintiffs’ motion is dismissed.

[31] The parties may make written submissions on costs. I would ask Defendant’s counsel to email my assistant short submissions within two weeks of today, and for Plaintiffs ’ counsel to email my assistant equally short submissions within two weeks thereafter.

Released: May 9, 2023 Morgan J.