Inselberg v. Morgan Stanley Smith Barney, LLC

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ERIC INSELBERG, Plaintiff, v. MORGAN STANLEY SMITH BARNEY, LLC, CHRISTOPHER P. ARNELLA, WILLIAM D. ARD, WILLIAM BRONSTEEN, and JOHN DOES A-Z, Defendants, and STOCKTWITS, INC., Nominal Defendant.

No. ESX-L-6496-22

Superior Court of New Jersey, Law Division, Essex Vicinage

September 20, 2024

NOT TO BE PUBLISHED WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS

Michael S. Kasanoff, LLC, Bois Schuller Flexner, Arsenault & Fassett, LLC, and Bondarowicz & Asso., LLC attorneys for Plaintiff (Michael S. Kasanoff, Esq. on the brief)

Davis + Gilbert LLP and Kennedys CMK LLP, attorneys for Defendant William Bronsteen (Ina B. Scher, Esq. on the brief)

Marino, Tortorella & Boyle, P.C., attorneys for Defendants Morgan Stanley Smith Barney, LLC, Christopher P. Arnella and William D. Ard

OPINION

SANTOMAURO, D., J.S.C

Plaintiff Eric Inselberg moves to compel discovery from defendant William Bronsteen ("Bronsteen"). Specifically, plaintiff seeks an order requiring Bronsteen to execute, and provide to plaintiff, a United States Department of Homeland Security ("DHS") Authorization Form consenting to DHS disclosing records relating to an investigation it performed concerning Bronsteen, a DHS agent. Bronsteen opposes the motion. For the reasons set forth below, plaintiff's motion is denied without prejudice.

I. BACKGROUND

Plaintiff's discovery application, as well as the background of this dispute, are anything but straightforward. Plaintiff filed this action against various John Doe defendants on November 1, 2022, alleging that plaintiff is a victim of identity theft by the John Doe defendants. Specifically, plaintiff claimed that the John Doe defendants illegally stole his identify and committed multiple invasions of privacy by posting multiple false, disparaging posts under the names "EricInselberg" and "JoeSkibaGiants" on a stock message board site known as StockTwits owned by nominal defendant StockTwits, Inc. Complaint (Transaction Id. No. LCV20223830341) at ¶¶ 3-5, 7-11.

Thereafter, plaintiff issued subpoenas to further investigate the alleged identify theft. Plaintiff learned from the responses to subpoenas to StockTwits that the "EricInselberg" and "JoeSkibaGiants" accounts were established with two phony email addresses. See First Amended Complaint ("FAC") (Transaction Id. No. LCV20233117855) at ¶¶ 41-45. Plaintiff then filed his FAC on October 13, 2023. See id.

The FAC asserted claims against defendant Morgan Stanley Smith Barney, LLC ("Morgan Stanley"), defendant Christopher P. Arnella ("Arnella"), who is a licensed securities financial advisor, licensed insurance agent, and First VicePresident, Senior Portfolio Manager, Financial Advisor with Morgan Stanley, and defendant William D. Ard ("Ard"), a former Morgan Stanley licensed securities financial advisor (Morgan Stanley, Arnella, and Ard collectively, the "Morgan Stanley defendants"). Id. at Nature of the Action; ¶¶ 10-13. Plaintiff claimed that he had previously initiated an arbitration against the Morgan Stanley defendants relating to their role in plaintiff's investment in Amarin Corporation ("Amarin") that was filed with the Financial Industry Regulatory Authority ("FINRA") (the "Dispute"). Id. at Nature of the Action; ¶¶ 30, 144. Specifically, plaintiff alleged that he had been wrongfully indicted for alleged fraud concerning sports memorabilia (the indictment was ultimately dismissed by the government), and thereafter sued the New York Giants for causing the wrongful indictment. When plaintiff settled the lawsuit against the Giants, Ard contacted plaintiff about managing plaintiff's money at Morgan Stanley and introduced plaintiff to Arnella. Plaintiff invested moneys with the Morgan Stanley defendants - with the bulk of his account ultimately invested in Amarin. Amarin's stock price ultimately plunged, which resulted in plaintiff suffering financial losses and initiating the Dispute. Id. at ¶¶ 24-30.

Plaintiff's FAC alleged that while the Dispute, which ultimately settled, was pending, Morgan Stanley, Arnella, and Ard engaged in a scheme to adversely impact plaintiff's claim in the Dispute by stealing his identify and posting information on StockTwits as if it were plaintiff posting. Id. at Nature of the Action; ¶¶ 31-35, 6582, 92-97. The FAC also asserted claims against certain of Anrella's relatives, a "Jeffrey Bronski," who was alleged to be the Director of IT at the New York branch of Oversea-Chinese-Banking-Corporation Ltd. ("OCBC"), and OCBC, all of whom plaintiff alleged were part of the scheme. Id. at ¶¶ 14-17, 42-43, 62-63.

Plaintiff's FAC also named John Doe individuals as defendants, alleging that these individuals posted under the names "EricInselberg" and "JoeSkibaGiants." Id. at ¶ 18. Although identified as separate John Doe defendants in the FAC, it appears that plaintiff knew, at the time the FAC was filed, that the separate John Doe defendants were a single individual, as well as the identity of that individual (i.e. Bronsteen). Specifically, prior to plaintiff filing the FAC, the John Doe defendants filed a motion for a protective order and a motion to quash in connection with two of subpoenas issued by plaintiff in this action. See Motion for a Protective Order (Transaction Id. No. LCV20231403829), Motion to Quash (Transaction Id. No. LCV20231490820). The motion for a protective order stated that plaintiff knew the names of the John Doe defendants identified in the Complaint (and their employer) because plaintiff or plaintiff's counsel had filed a grievance against them with their employer. See Certification of Ina B. Scher, Esq. (Transaction Id. No. LCV20231403829) at ¶¶ 8-12. In addition, the motion to quash noted that the John Doe defendants' counsel had previously identified them to plaintiff's counsel. See Certification of Ina B. Scher, Esq. (Transaction Id. No. LCV20231490820) at ¶¶ 710. Moreover, even though the FAC named separate John Doe defendants, it asserted factual allegations alleging that a single John Doe defendant was a DHS agent, admitted on tape that he authored all of the StockTwits posts, and claimed that he acted alone and does not know the other defendants. FAC at Nature of the Action; ¶¶ 18, 44-48.

The court ultimately allowed the disclosure of the John Doe defendant's name (i.e. Bronsteen) and employer (i.e. the DHS). Plaintiff then filed a Seconded Amended Complaint ("SAC") on March 19, 2024. The SAC, which is plaintiff's current operative pleading, asserts that Bronsteen, a DHS agent and a friend of plaintiff's brother-in-law, posted under the names "EricInselberg" and "JoeSkibaGiants" on StockTwits, and schemed with the Morgan Stanley defendants to injure plaintiff. SAC (Transaction Id. No. LCV2024716163) at ¶¶ 47-86. The SAC, which does not include the other Arnella family members, Bronski, or OCBC as defendants, asserts a number of causes action against Bronsteen and the Morgan Stanley defendants, including a violation of N.J.S.A. § 2A:38A-3 (New Jersey Computer Related Offenses Act), invasion of privacy, intentional infliction of emotional distress, violation of N.J.S.A. § 2C:41-2 (racketeering), and civil conspiracy. Id. at pp. 36-46. In summary, plaintiff alleges:

1. Plaintiff Eric Inselberg believed he could trust Morgan Stanley and his long-time friend and investment advisor, Defendant Bill Ard. Plaintiff thought his money would be managed wisely and his personal information safeguarded. He thought Morgan Stanley would do right by him. He was wrong.

2. After Ard and Defendant Chris Arnella lost Plaintiff's wealth on a risky bet in a one-drug biotech company, Plaintiff initiated an arbitration against them and their employer, Morgan Stanley, with the Financial Industry Regulatory Authority ("FINRA"). Rather than play fair in the arbitration, Defendants sought to fabricate a record from which they could argue that Plaintiff was a sophisticated investor who instructed Ard and Arnella to put all of his wealth in one speculative stock. Defendants sought to hurt and take advantage of Plaintiff a second time.

3. To do this, Defendants stole Plaintiff's identity and established fake social media accounts while the arbitration was pending. Defendants posted a string of messages online, targeting Plaintiff not only to support their arbitration defense but also to cause Plaintiff severe emotional distress. Defendants knew deeply personal information about Plaintiff, including a history of trauma from a wrongful indictment where perjured testimony was used to falsely implicate Plaintiff, who was innocent, in a criminal scheme. Defendants misused this information to create and post content based on Plaintiff's personal and financial history, exploiting his emotional vulnerabilities.

4. Then, Morgan Stanley affirmatively used this fake social media history to discredit Plaintiff in the arbitration, writing directly to the arbitration panel and describing Plaintiff's allegations of identity theft as "preposterous." Morgan Stanley claimed that Plaintiff's identity theft allegations "show that [Plaintiff] is not credible and will do and say anything he believes to be in his interest, regardless of the truth."

5. Plaintiff's ability to litigate the arbitration was destroyed. He was forced to settle on terms favorable to Morgan Stanley. The theft of Plaintiff's personal information and the impersonation of his identity triggered Plaintiff's posttraumatic stress disorder ("PTSD"), and he suffered and will continue to suffer severe emotional distress from Defendants' conduct for which he is receiving ongoing psychiatric treatment.

[Id. at ¶¶ 1-5.]

Bronsteen and the Morgan Stanley defendants filed separate answers to the SAC. Both answers assert that Bronsteen admits he was acting alone. See Bronsteen Answer (T...