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United States District Court, Southern District of New York
Case No. 1:13-CV-07082-ER
Summary: Salvani sued iHub after refusing his request to remove third-party content.
Outcome: Case Dismissed on 9/23/2014.
Salvani's original complaint lacked a cause of action sufficient to invoke federal jurisdiction. When this fatal flaw was pointed out by iHub's counsel, Salvani's lawyer, Douglas R. Dollinger, filed an amended complaint followed by a second amended complaint which added some contrived securities law claims in an attempt to invoke federal jurisdiction. iHub moved to dismiss the lawsuit for lack of subject matter jurisdiction on the basis that the federal claims were not colorable and merely an attempt to masquerade a state-law tort (defamation) case as a federal case.
In reaching its opinion finding in favor of iHub, rather than treating the federal claims as not colorable and dismissing for lack of subject matter jurisdiction under Rule 12(b)(1), the Court dismissed Salvani's federal claims on the merits under Rule 12(b)(6) for effectively the same rationale, finding that Salvani failed to state a claim for which relief could be granted. The remaining state-law tort claims were also dismissed. Since all of Salvani's claims were dismissed, the Court did not need to reach to the matter of iHub's immunity from liability under the Communications Decency Act.
United States Court of Appeals, Second Circuit
Case No.: 14-3994
On 10/23/2014 Salvani filed a Notice of Appeal, despite the absurdity of his claims and the pending court cases (described below) brought by the U.S. Department of Justice and U.S. Securities & Exchange Commission against multiple individuals in connection with alleged trading manipulation of CodeSmart Holdings shares.
Outcome: On October 9, 2015, the United States Court of Appeals for the Second Circuit affirmed the decision in favor of InvestorsHub.
Other Background
The underlying basis of Salvani's contrived federal claim was, effectively, that an allegedly defamatory post on the InvestorsHub CodeSmart Holdings message board by an anonymous user, in combination with "inflammatory" titles of entirely unrelated message boards somehow caused a massive sell-off in the shares of CodeSmart Holdings Inc. (ITEN) and constituted violations of the Exchange Act. Several months after iHub filed its motion to dismiss which debunked Salvani's novel theories, the U.S. Securities and Exchange Commission and U.S. Attorney for the Eastern District of New York each made public their own theories as to what had occurred with regard to the manipulation and trading of CodeSmart shares:
It should be noted that Mr. Salvani self-described certain aspects of his relationship with CodeSmart in his pleadings to the iHub Court. He was not named or charged in either the SEC complaint or the DOJ criminal indictment. The SEC's press release states that their investigation "is continuing."
On 09/18/2014, investigative reporter Teri Buhl published this article about the ongoing government investigation and charges, followed by this update on 11/07/2015.
