STUART M. BERNSTEIN, United States Bankruptcy Judge:
The Debtors (collectively, "Gawker") sold substantially all of their assets to Gizmodo Media Group LLC ("Gizmodo") free and clear of all liens, claims, interests and encumbrances pursuant to Bankruptcy Code § 363(f). Prior to the sale, Gawker had published an article (the "Article") on one of its websites that allegedly defamed
The material facts are not in dispute. Prior to the petition date, Gawker operated seven distinct media brands with corresponding websites under the names Gawker, Deadspin, Lifehacker, Gizmodo, Kotaku, Jalopnik and Jezebel. (Declaration of William D. Holden in Support of First Day Motions, dated June 12, 2016 ("Holden Declaration"), 10-11 (ECF Doc. # 7).) Gawker faced a number of pre-petition lawsuits in connection with content they produced and posted on these websites. (Holden Declaration at ¶ 30.) After years of litigation, on June 10, 2016, Gawker Media LLC filed a voluntary chapter 11 petition in this district. Gawker Media Group, Inc. and Gawker Hungary Kft. filed chapter 11 petitions two days later.
On June 13, 2016, Gawker filed a motion to sell substantially all of the Debtors' assets free and clear of all liens, claims and encumbrances. Gizmodo won the bid,
The Sale Order included provisions that shielded Gizmodo from liability for claims against Gawker. Paragraph 14 of the Sale Order provided in pertinent part:
(Id. at ¶ 21.)
The Sale Order also contained jurisdictional provisions. The Court retained exclusive jurisdiction, inter alia, to "interpret, implement and enforce" the Sale Order and the APA and "to adjudicate, if necessary, any and all disputes concerning or relating in any way to the Sale." (Sale Order at ¶ 46.) In addition, the Court retained jurisdiction to "protect Buyer and its assets, including the Acquired Assets, against any Adverse Interests (other than Permitted Liens and Assumed Liabilities) and Successor or Transferee Liability." (Id. at ¶ 47.) The sale closed on September 9, 2016.
While Gawker was proceeding with the sale process, Deadspin posted the Article on its website on June 23, 2016. (Complaint at ¶ 16.)
On August 22, 2016, the same day the Court signed the Sale Order, the Plaintiffs sent another letter, this time to Gizmodo's counsel demanding the removal of the Article from the website after the closing date of the sale. (Gizmodo Motion, Ex. A.) The Plaintiffs also noted that "[w]e understand that [Gizmodo] recently agreed to purchase substantially all of the assets of Gawker, including Deadspin.com." (Id. at 1.) The Plaintiffs do not dispute that they had prior notice of the proposed sale and the proposed sale order, and never objected to either.
On June 22, 2017, the Plaintiffs filed their state court action against Gizmodo and Goldberg. The Complaint asserted causes of action based on the pre-sale publication of the Article sounding in (i) defamation; (ii) intentional interference with prospective economic advantage; and (iii) tortious interference with contractual relations. (Complaint at ¶¶ 42-64.) According to the Plaintiffs, their claims arose "out of the publication of numerous false and defamatory
The Complaint did not mention the sale or the Sale Order, and the only reference to post-sale conduct concerned the failure to remove the Article. The Plaintiffs alleged that "[a]fter [Gizmodo] took over control of Deadspin.com, Plaintiffs' counsel subsequently contacted [Gizmodo] advising it of the same. [Gizmodo], however, has failed to remove and/or retract the Story, which remains on Deadspin.com as of the date of this Complaint." (Id. at ¶ 7.) Similarly, its three claims charged that the defendants caused the Article to be "published and/or maintained" (or some variation thereof) on the Deadspin website. (See id. at ¶¶ 43, 46, 48, 50, 54, 55, 59, 61.)
Gizmodo filed the Motion on August 21, 2017, and the Plan Administrator filed a joinder. (Joinder and Reservation of Rights by the Plan Administrator to the Motions of Ryan Goldberg and Gizmodo Media Group, LLC to Enforce the Sale Order and Confirmation Order and Bar Certain Plaintiffs From Prosecuting Their State Court Actions, dated Sep. 5, 2017 (the "Joinder") (ECF Doc. # 997).) The Motion asserted that the Plaintiffs' action against Gizmodo was based on pre-sale conduct, and was barred by the terms of the Sale Order. The Plan Administrator argued that the Sale Order "was intended to protect against exactly the types of claims raised in the Complaint being brought months after the closing of the Sale and confirmation of the [Plan]" and urged the Court to grant the Motion. (Joinder at ¶ 15 & p. 9 (emphasis added).) The Plaintiffs responded that the Court lacked jurisdiction over the causes of action or, in the alternative, the Court must abstain from adjudicating these proceedings because they implicate state law. The Plaintiffs also argued that their state court action was based entirely on post-sale conduct, i.e., that Gizmodo maintained the Article post-sale, and this conduct gave rise to a new cause of action. (Objection of Pregame LLC and Randall James Busak to Motions of (1) Gizmodo Media Group, LLC and (2) Ryan Goldberg, Seeking to Enforce Orders of this Court Action and in Response to the Joinder of the Plan Administrator to Such Motions, dated Sep. 15, 2017 (the "Objection") (ECF Doc. # 1006.)
Bankruptcy Courts have jurisdiction to interpret and enforce their own
Although the Court has jurisdiction, the Plaintiffs ask the Court to abstain from exercising it in deference to the state court litigation. Initially, mandatory abstention does not apply to core proceedings. See 28 U.S.C. § 1334(c)(2) (the Court must abstain when, inter alia, the proceeding is "related to a case under title 11 but not arising under title 11 or arising in a case under titled 11); In re Gen. Growth Properties, Inc., 460 B.R. 592, 601 (Bankr. S.D.N.Y. 2011) ("Since the State Court Action is one `arising in' a bankruptcy case and within this Court's core jurisdiction, mandatory abstention under 28 U.S.C. § 1334(c)(2) is inapplicable on its own terms.")
This leaves permissive abstention. See 28 U.S.C. § 1334(c)(1). Federal courts have a "virtually unflagging obligation" to exercise the jurisdiction given to them. Colorado River Water Conservation District v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). While permissive or discretionary abstention may nonetheless be appropriate under certain circumstances, the Plaintiffs' abstention argument, like its jurisdictional argument, is based on a misunderstanding of the issue before the Court. The Court is not ruling on the sufficiency of the Plaintiffs' defamation or other tort claims, but instead, whether the claims, as pleaded, are barred by the Sale Order. See Goldman v. Picard (In re Bernard L. Madoff Inv. Secs. LLC), No. 12 Civ. 6109 (RJS), 2013 WL 5511027, at *6 (S.D.N.Y. Sept. 30, 2013) (Although the legal sufficiency of the Complaints is not before the Court, "whether the Complaints plead a bona fide control person claim is relevant" the "Appellants cannot ... shield their Complaints from all scrutiny, since the question before this Court is whether Appellants' claims, as pleaded in the Complaints, should be allowed to proceed despite the Injunction and automatic stay.") (emphasis in original).
This Court is in the best position to interpret its own orders, and its interpretation
The Plaintiffs implicitly concede that the Sale Order bars any claims based on pre-sale conduct. They argue that "[t]he Complaint on its face only seeks relief for post-sale conduct, and thus the Sale Order is not implicated." (Objection at ¶ 59.) This argument is disingenuous. The Complaint opens with the proclamation that "t]his action by plaintiffs ... arises out of the publication of numerous false and defamatory statements about Plaintiffs by defendant Ryan Goldberg ("Mr. Goldberg") on Deadspin.com, which is owned and operated by Gizmodo []." (Complaint at ¶ 1 (emphasis added).) The "publication" refers to the initial posting of the Article on June 23, 2016. (See Complaint at ¶ 25.) The vast majority of the allegations discuss the publication of the Article and the immediate aftermath and do not mention the Sale Order.
The Sale Order bars the claims arising from the pre-sale publication of the Article. Under New York's single publication rule,
As the Plaintiffs implicitly concede, the Sale Order bars any claims against Gizmodo arising from the publication of the allegedly defamatory Article on June 23, 2016. Accordingly, the Plaintiffs are enjoined from asserting those claims in state court. Gawker also asks me to reject any post-sale claims because the Complaint, it says, does not allege a legally sufficient republication claim. I decline the invitation. Whether the Complaint alleges a legally sufficient post-sale claim against Gizmodo based on republication or some other theory is an issue best left to the state court presiding over the action.
Settle order on notice.