IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 11-cv-2434-WYD-MEH

CARL GENBERG,

Plaintiff,

v.

STEVEN S. PORTER,

Defendant.

ORDER ON MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION

THIS MATTER is before the Court on Defendant Steven S. Porter’s Motion for 

Summary Judgment (ECF No. 235), filed on January 18, 2016. The matter arises out 

of events surrounding Plaintiff Carl Genberg’s (“Genberg”) separation from his 

employer, Ceragenix Pharmaceuticals (“Ceragenix”). Defendant Steven S. Porter 

(“Porter”) served as the Chief Executive Officer of Ceragenix, and as a member of its 

Board of Directors. Porter claims that Genberg, who served as the company’s Vice 

President of Research and Development, was fired pursuant to a unanimous vote of the 

Board of Directors of Ceragenix for breaching his fiduciary duty of loyalty in providing 

material non-public information to outsiders. 

On December 29, 2014, Plaintiff Carl Genberg (“Genberg”) filed his Third 

Amended Complaint (“TAC”) in this matter against Porter. Genberg claims that he 

engaged in protected activity under the Sarbanes-Oxley Act (“SOX”) (18 USC § 1514A), 

and that his termination was in retaliation for that activity. Genberg also claims that 

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Porter issued defamatory statements about Genberg in publications about Genberg’s 

termination, and that Nevada law, not Colorado law, governs his claim of defamation. 

II. BACKGROUND

Genberg worked for Ceragenix Pharmaceuticals, Inc. and Ceragenix Corporation

(“Ceragenix”) from January 1, 2005, to March 28, 2010, as the Senior Vice President for 

Research and Development. Ceragenix Pharmaceuticals, a Delaware corporation, 

became a public company in April 2005 through a reverse merger with Onsource

Corporation (“Onsource”). In the reverse merger, Onsource acquired Osmotics 

Pharma, Inc., a subsidiary of Osmotics Corporation, and Onsource transferred 92% of 

its shares to Osmotics Corporation. The end result of the reverse merger was that 

Osmotics Pharma, Inc., became Ceragenix Corporation, and Onsource became 

Ceragenix Pharmaceuticals.

Subsequent to the reverse merger, Osmotics Corporation created a Plan of 

Distribution, under which Osmotics Corporation placed over twelve million Ceragenix 

Pharmaceuticals shares in a custodial account awaiting final distribution to Osmotic 

Corporation’s shareholders that chose to exchange their shares for shares in Ceragenix 

Pharmaceuticals. Osmotics Corporation granted Ceragenix Pharmaceuticals’s Board 

of Directors (“BOD”) the irrevocable power to vote the shares of Ceragenix 

Pharmaceuticals held in the custodial account. Thus, even though Osmotics 

Corporation owned the over twelve million Ceragenix Pharmaceutical shares in the 

custodial account, Osmotics Corporation’s shareholders turned over the voting power 

with respect to those shares. Osmotics Corporation anticipated that the shares in the 

custodial account would be distributed and exchanged within one year. However, after 

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five years, the shares had not been distributed, and as of 2010, the Plan of Distribution 

had not been completed. 

Genberg approached his friend and one of the largest owners of Osmotics 

Corporation shares, Joseph Salamon (“Salamon”), and proposed that Salamon create 

his own plan for exchanging his Osmotics Corporation shares for Ceragenix 

Pharmaceuticals shares, and present the plan to Osmotics Corporation’s BOD. 

Salamon created a plan and authorized Genberg to present the plan to Porter. Porter 

rejected the plan, and accused Genberg of providing material non-public information to 

Salamon to induce him to make the offer. The BOD discussed concerns about 

Genberg’s communications with outside parties in February 2010, and scheduled a 

BOD meeting for March 3, 2010. ECF No. 235, p. 6. 

Genberg spoke to Salamon again, and suggested that Salamon write a letter to 

Ceragenix’s BOD regarding concerns about voting the shares and the BOD’s failure to 

hold annual shareholder meetings in violation of Delaware law. Genberg drafted an 

email that Salamon signed and sent to the BOD on March 2, 2010 (the “Salamon 

email”). See ECF No. 235-14. Suspecting that Genberg was the true author of the 

email, the BOD sent a letter to Genberg on March 3, 2010, instructing him to cease and 

desist from any further communications with outsiders on these issues. See ECF No. 

235-16. The following day, Genberg sent a letter to Cheryl Hoffman-Bray, a member of 

the Ceragenix’s BOD and head of the Audit Committee, alleging that Porter had 

engaged in insider trading and committed several other federal securities violations (the 

“Hoffman-Bray letter”). See ECF No. 235-17, p. 3-6. 

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In response to the concerns raised by the Hoffman-Bray letter, Ceragenix 

launched an investigation into the insider trading allegations, as well as the authorship 

of the Salamon email, by way of an independent investigator, attorney Marc Redlich

(“Redlich”). Redlich interviewed Genberg and confirmed that Genberg authored the 

Salamon email. On March 17, 2010, Redlich disclosed the results of his investigation to 

Ceragenix’s BOD. Redlich concluded that Genberg had willfully violated his fiduciary 

duty of loyalty to the company and that termination might be appropriate. 

On March 26, 2010, Ceragenix’s BOD held a special teleconference meeting to

discuss the Salamon email and the results of Redlich’s report. The BOD agreed to 

terminate Genberg for cause in accordance with his employment agreement, which 

stated that a breach of fiduciary duty could result in termination for cause. ECF No. 89-

2, p. 21, ¶ 15(a)(4). On March 26, 2010, Porter notified Genberg via letter that his 

employment was being terminated for cause, effective March 29, 2010, for breach of 

fiduciary duty of loyalty for drafting the Salamon email. Porter then sent email

communications regarding Genberg’s termination to Ceragenix’s investor relations 

consultant and three members of the secured lenders for Ceragenix. He also filed a 

Form 8-K with the SEC, which is a required report for certain material corporate events, 

disclosing that Genberg had been terminated as an officer of the company.

On July 11, 2011, Genberg filed this action in the United States District Court for

the District of Nevada. Porter filed a Motion to Transfer Venue and on September 6, 

2011, this matter was transferred to the United States District Court for the District of 

Colorado.

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III. STANDARD OF REVIEW

Pursuant to rule 56(c) of the Federal Rules of Civil Procedure, a court may grant 

summary judgment where "the pleadings, depositions, answers to interrogatories, and 

admissions on file, together with the affidavits, if any, show that there is no genuine 

issue as to any material fact and the . . . moving party is entitled to judgment as a matter 

of law." Fed. R. Civ. P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 

(1986); Equal Emp’t Opportunity Comm’n v. Horizon/CMS Healthcare Corp., 220 F.3d 

1184, 1190 (10th Cir. 2000). Summary judgment is appropriate “if the pleadings, the 

discovery and disclosure materials on file, and any affidavits show that there is no 

genuine issue as to any material fact and that the movant is entitled to judgment as a 

matter of law.” Fed.R.Civ.P. 56(c). A material fact is one that might affect the outcome 

of the dispute under the applicable law. Ulissey v. Shvartsman, 61 F.3d 805, 808 (10th 

Cir. 1995). The Court must construe all inferences in favor of the party against whom 

the motion under consideration is made. Pirkheim v. First Unum Life Ins. Co., 229 F.3d 

1008, 1010 (10th Cir. 2000). All doubts must be resolved in favor of the existence of 

triable issues of fact. Boren v. Sw. Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991).

IV. DISCUSSION

 In his third amended complaint, Plaintiff asserts two causes of action: 

1) Sarbanes-Oxley Act Retaliation Violation, pursuant to 18 U.S.C. § 1514A; and 

2) Defamation. See TAC, ECF No. 175. 

A. Sarbanes-Oxley Act Retaliation Violation

SOX prohibits publicly traded companies from discharging an employee because 

of any lawful act done by the employee:

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(1) to provide information, cause information to be provided, or otherwise 

assist in an investigation regarding any conduct which the employee 

reasonably believes constitutes a violation of section 1341 [mail fraud], 

1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud], any

rule or regulation of the Securities and Exchange Commission, or any 

provision of Federal law relating to fraud against shareholders, when 

the information . . . is provided to

. . . 

(C) a person with supervisory authority over the employee (or such 

other person working for the employer who has the authority to 

investigate, discover, or terminate misconduct).

18 U.S.C. § 1514A(a)(1)(C). A plaintiff bears the burden of establishing a prima 

facie case under § 1514A and must prove by a preponderance of the evidence that: 1) 

he engaged in protected activity; 2) the employer knew that he engaged in the protected 

activity; 3) he suffered an unfavorable personnel action; and (4) the protected activity 

was a contributing factor in the unfavorable action. Lockheed Martin Corp. v. 

Administrative Review Board, 717 F.3d 1121, 1129 (10th Cir. 2013). To demonstrate 

that a plaintiff engaged in a protected activity, he must show that he had both a 

subjective belief and an objectively reasonable belief that the conduct he complained of 

constituted a violation of relevant law. Id. at 1132. 

It is undisputed that Genberg suffered an unfavorable personnel action –

termination of employment – and that Porter stated that he was being terminated for his 

role in drafting the Salamon email. Thus, the relevant question is whether Genberg 

engaged in protected activity under § 1514A when he drafted the Salamon email. 

In order for activities to be considered protected under § 1514A, they must be 

covered by one of the six laws enumerated in the statute. Such protected activity must 

relate to the substantive law protected by SOX “definitively and specifically.” Fraser v. 

Fiduciary Trust Co. Int’l, 2009 WL 2601389, at *5 (S.D.N.Y. Aug. 25, 2009) (citations 

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omitted). General inquiries do not constitute protected activity. The Salamon email, in 

pertinent part, contained the following statements:

We are writing to you to request the immediate transfer of voting rights in 

the proxy you hold over shares of Ceragenix. . . . This request is based, in 

part, on recent SEC changes to proxy voting rules (affecting the ability of 

shares held in “street name” to be voted by brokers in uncontested 

elections for the Board of Directors) and the stated rationale of the SEC 

Chairman Shapiro: “The amendment was designed to help assure that 

voting rights for director elections are exercised by those with an 

economic interest in the company, rather than by broker, thereby 

improving corporate governance and enhancing accountability.” While the 

new proxy rule is not directly applicable (as it applies to share[s] held in 

street name voted by brokers), the policy rationale is clearly on point. We 

believe that [it] is neither fair, just [n]or equitable that you retain the voting 

power over these shares for 5 years and use such power to re-elect the 

members of the Board of Directors without any consideration for the 

interests of investors. We therefore request that the proxy should be 

assigned to us as the beneficial parties in interest of these shares. 

ECF No. 235-14, p. 2

The Salamon email also noted that the BOD had failed to hold annual 

shareholder meetings, which it alleged was in violation of Title 8 Section 211(C) of the 

Delaware General Corporate Laws. The email concludes as follows:

We hope that you share SEC Chairman Shapiro’s view that voting rights 

should be exercised by those with an economic interest in the company. 

We ask that you immediately transfer to us the proxy granted to you over 

the common shares of Ceragenix so that we may exercise this voting 

power until such time that Osmotics completes its long delayed plan of 

distribution for these shares.

Id. at 4. 

The only enumerated law referenced in the Salamon email is “any rule or 

regulation of the Securities and Exchange Commission.” However, the author of the 

email admits that the rule “is not directly applicable” in this matter. Instead, the email 

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urges the BOD to consider the rationale of the rule, and relies on the argument that it is 

“neither fair, just [n]or equitable” that the BOD retain voting power over the shares in 

question. 

It is clear that Genberg and Salamon were unhappy with the fact that the 

distribution plan had not been completed in the time frame anticipated by all of the 

parties when the plan was conceived. However, the fact remains that in 2005, the 

shareholders – including Salamon – knew that twelve million shares were being placed 

into an escrow account, and they agreed to grant the BOD the irrevocable power over 

those shares until the plan of distribution was completed. Genberg, far from being an 

unsophisticated employee who might require the protections of a broad SOX provision 

in order to blow the whistle on internal misconduct, admits to being a “former trial 

attorney specializing in securities and business litigation.” ECF No. 236, p. 2. His 

knowledge of SOX and related matters, along with the nonspecific allegations of his 

email, lead the Court to conclude that he did not have a reasonable belief that any 

specific SEC rule or regulation was being violated. Further, none of the other

enumerated laws is referenced in the email. Although the email suggests that the BOD 

was in violation of rules pertaining to shareholder meetings, the email cites Delaware 

law, not federal law. Because none of the six enumerated laws of § 1514A is

referenced in the Salamon email, it does not qualify as protected activity, and Genberg 

cannot establish a prima facie case under SOX. 

Porter concedes that Genberg’s Hoffman-Bray letter constitutes protected activity 

under SOX. Whether the Hoffman-Bray letter was a contributing factor to Genberg’s 

termination is disputed. Considering the dispute in a light most favorable to Genberg, 

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the Court presumes that Genberg can establish a prima facie case of a SOX violation 

for writing the Hoffman-Bray letter. The burden, therefore, shifts to Porter to 

demonstrate by clear and convincing evidence that the BOD would have taken the 

same adverse employment action even in the absence of the protected activity. See 

Wiest v. Tyco Elecs. Co., 812 F.3d 319, 329 (3d Cir. 2016). Genberg argues that the 

temporal proximity between his insider trading allegations against Porter and his 

termination suggest that his protected activity contributed to his termination. 

However, temporal proximity alone is insufficient to show causation where there 

exists an intervening event that would have led to the adverse action. Mizusawa v. U.S. 

Dep’t of Labor, 524 Fed. Appx 443, 448 (10th Cir. 2013); Wiest, 812 F.3d at 319 (a 

causal connection may be severed by some legitimate intervening event); Yang v. 

Navigators Grp. Inc., 2016 WL 67790, at *6 (S.D.N.Y. Jan. 4, 2016) (“Temporal 

proximity does not, however, ‘compel a finding of causation, particularly when there is a 

legitimate intervening basis for the adverse action.’”); Barber v. Planet Airways, Inc., 

2006 WL 1151953, at *5 (ARB Apr. 28, 2006) (“inferring a causal relationship between 

the protected activity and the adverse action is not logical when the two are separated 

by an intervening event that independently could have caused the adverse action.”). 

Here, Porter argues that the intervening events include the confirmation that 

Genberg authored the Salamon email and the findings of Redlich’s report.1

 

Redlich’s report included the following statements:

The most surprising revelation to me was Carl Genberg’s admission in our 

meeting that he had drafted the demand letter sent by Joseph Salamon

1 Genberg argues in his Response that the Redlich report cannot be considered at the summary judgment 

stage because it is hearsay under F.R.E. 801(c). However, it is clear that the report is not being offered 

for the truth of the matter asserted, but instead for the effect that it had on the BOD’s state of mind. See 

Fester v. Farmer Bros. Co., 49 Fed. Appx 785, 789 (10th Cir. 2002).

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. . . . I see this as an improper action (and no doubt the culmination of 

other improper actions), in violation of Genberg’s duty of loyalty to the 

Company. It is the Board of Directors, comprised of the elected 

representatives of the shareholders, that sets overall company policy and 

direction; and it is the duty of the officers to execute and accomplish those 

policies. By aiding and abetting a take-over attempt and drafting a letter 

for an outside organization confronting the Board, Genberg has in my 

opinion, crossed the line and breached his fiduciary duty of loyalty to his 

Company. Whatever his reasons or beliefs, those should have been 

properly expressed to the Board confidentially, not in a broadside on 

behalf of an outside group, or groups, seeking to seize control of the 

Company and to oust its Board . . . . [T]he revelation about Genberg’s role 

in the Salamon demand letter may prompt the Board to take a new look at 

whether Genberg’s minuses outweigh the pluses going forward.

ECF No. 235-37, p. 10-12. 

The record indicates that the BOD was concerned about Genberg’s 

communications with outside entities in February of 2010. See ECF No. 235, p. 6. 

After the investigation by Redlich and the findings of his report, combined with the 

BOD’s previous concerns about Genberg’s loyalty and the confirmation of Genberg’s 

role in drafting the Salamon email, the BOD made the decision to terminate Genberg’s 

employment. Genberg was fired because the BOD believed he had colluded with 

outsiders. See id. at 17. Because there was a legitimate intervening basis for 

Genberg’s termination, any argument that he was terminated because of his protected 

activity of writing the Hoffman-Bray letter is undermined. Further, it is not the role of the 

Court to “act as a ‘super-personnel department’ second guessing employers’ honestly 

held (even if erroneous) business judgments.” Young v. Dillon Co., 468 F.3d 1243, 

1250 (10th Cir. 2006), citing Jones v. Barnhart, 349 F.3d 1260, 1267 (10th Cir. 2004); 

see also Rivera v. City and Cnty of Denver, 365 F.3d 912 (10th Cir. 2004) (“The 

relevant inquiry is not whether the employer’s proffered reasons were wise, fair or 

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correct, but whether it honestly believed those reasons and acted in good faith upon 

those beliefs.”); Wiest, 812 F.3d at 319 (it is not the court’s role to “second-guess a 

human resources decision that followed a thorough investigation.”); Feldman v. Law 

Enforcement Assoc. Corp., 752 F.3d 339 (4th Cir. 2014) (applying the same logic to 

SOX claims). 

Accordingly, because Genberg has failed to establish a prima facie case of an 

SOX violation for drafting the Salamon email, and Porter has demonstrated a legitimate 

intervening event to justify Genberg’s termination despite any protected activity under 

SOX, Porter is entitled to summary judgment on Genberg’s claim of SOX retaliation. 

B. Defamation

On March 28, 2010, Porter sent an email to Jim Painter, Ceragenix’s investor 

relations consultant in order to notify him of Genberg’s termination and to prepare him 

for possible investor inquiries (the “Painter email”). In that email, Porter referred to 

Genberg’s actions as part of a “hostile takeover assault” and that Genberg had acted as 

“the Judas in house facilitating [the] takeover.” ECF No. 235, p. 12. On March 29, 

2010, Ceragenix released a Form 8-K (an SEC report of certain material corporate 

events), which stated that Genberg had been terminated for cause, and that his 

termination was the result of an investigation (the “Form 8-K”). ECF No. 235-39. 

Finally, on March 29, 2010, Porter sent an email to the three managing members of the 

secured lenders for Ceragenix (the “lenders email”) to notify them of Genberg’s 

termination, noting that he had been terminated for “willful breach of fiduciary loyalty.” 

ECF No. 235, p. 13.

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Genberg argues that statements in all three publications constitute defamation 

per se and that the statements were made with actual malice. TAC, ¶¶ 81, 152-53. He

argues that the phrase “terminated for cause” in the Form 8-K is an unprivileged 

statement that Genberg was unfit for office. Id. at ¶ 147. He further argues that Porter’s 

use of the term “Judas” in the Painter email was meant to “vilify and defame” Genberg, 

and was anti-Semitic in nature. Id. at ¶ 149; Response, ECF No. 236, p. 50 n.4, 54. He 

argues that he has suffered damage to his reputation as a result of the statements. Id.

at ¶ 154. Genberg also argues that Nevada law, not Colorado law, governs his 

defamation claim. Porter takes no position on the choice of law issue, but argues that 

regardless of which state’s law governs, Genberg’s claim has no merit.

A federal district court exercising diversity jurisdiction under 28 U.S.C. § 1332 

must apply the choice of law rules of the forum state. Iskowitz v. Cessna Aircraft Co., 

2009 WL 3162016, at *2 (D. Colo. Sept. 30, 2009); Klaxon Co. v. Stentor Elec. Mfg. Co.,

313 U.S. 487, 496 (1941). Colorado's choice of law standard is the “most significant 

relationship to the occurrence and parties test” as expressed in the Restatement 

(Second) Conflict of Laws, §145. AE, Inc. v. Goodyear Tire and Rubber Co., 168 P.3d 

507 (Colo. 2007). Section 145 of the Restatement provides more specific guidance 

concerning tort claims. First, the rights and liabilities of the parties with respect to an 

issue in tort are determined by the local law of the state which has the most significant 

relationship to the occurrence and the parties. Second, contacts to be taken into 

account include the place where the injury occurred; the place where the conduct 

causing the injury occurred; the domicile, residence, nationality, place of incorporation 

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and place of business of the parties; and the place where the relationship, if any, 

between the parties is centered. 

Genberg is a citizen of the State of Nevada, domiciled in the city of Las Vegas. 

At all times material to this matter, he worked from a home office in Las Vegas, Nevada. 

TAC, ¶ 82. Genberg argues that the three communications from Porter to various 

parties constitute multistate publications, but that his reputation was injured in Nevada. 

Porter does not dispute this. Accordingly, the Court will analyze Genberg’s defamation 

claim under Nevada law.

The Supreme Court of Nevada has held that a defamation claim requires 

demonstrating 1) a false and defamatory statement of fact by the defendant concerning 

the plaintiff; 2) an unprivileged publication to a third person; 3) fault, amounting to at 

least negligence; and 4) actual or presumed damages. Pope v. Motel 6, 114 P.3d 277, 

282 (Nev. 2005); Simpson v. Mars, Inc., 929 P.2d 966, 967 (Nev. 1997). As to 

damages, if the defamatory communication concerns a person's lack of fitness for trade, 

business, or profession, or tends to injure the plaintiff in his or her business, it is 

considered defamation per se and damages are presumed. Clark Cnty. Sch. Dist. v. 

Virtual Educ. Software, Inc., 213 P.3d 496, 503 (Nev. 2009). 

The first question, then, is whether the statements in question were false and 

defamatory. “There can be no liability for defamation without proof of falsity,” and the 

plaintiff bears the burden of proof regarding the statement's falsity. Gordon v. 

Dalrymple, 2008 WL 2782914, at *3 (D. Nev. July 8, 2008), citing Nevada Ind. Broad. 

Corp. v. Allen, 664 P.2d 337, 412 (Nev. 1983); see also Flowers v. Carville, 112 F.

Supp. 2d 1202, 1210 (D. Nev. 2000) (a statement may only be defamatory if it contains 

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a factual assertion that can be proven false). It is a question of law, within the province 

of the court, to determine whether a statement is capable of defamatory construction. 

Branda v. Sanford, 637 P.2d 1223, 1225-26 (Nev. 1981). A statement is defamatory 

when “[u]nder any reasonable definition such charges would tend to lower the subject in 

the estimation of the community and to excite derogatory opinions against him and to 

hold him up to contempt.” Las Vegas Sun v. Franklin, 329 P.2d 867, 869 (Nev. 1958). 

The statements that Genberg was terminated for cause after an investigation, and had 

breached his duty of loyalty to the company could be construed as relating to his 

integrity and ability to perform his job, and thus, could be construed as defamatory 

because they impute dishonest and possibly unlawful conduct on the part of Genberg. 

If a statement is susceptible to different constructions, one of which is defamatory, it 

becomes a question of fact for the jury. Id; see also Fink v. Oshins, 49 P.3d 640, 646 

(2002) (whether a statement is true or false is an issue of fact for the jury); Nevada Ind. 

Broadcasting v. Allen, 664 P.2d 337, 343 (Nev. 1983) (the truth or falsity of an allegedly 

defamatory statement is an issue of fact properly left to the jury for resolution). 

Regardless of the Court’s determination of whether the statements meet the first 

element of defamation, Porter argues that he is entitled to summary judgment under the 

affirmative defense of the common interest privilege. Nevada’s common interest 

privilege protects the publication of a defamatory statement if the defendant made the 

statement “in good faith on any subject matter in which the person communicating has 

an interest, or in reference to which he has a right or a duty, if it is made to a person 

with a corresponding interest or duty.” Williams v. Univ. Med. Ctr. of S. Nevada, 688 F. 

Supp. 2d 1134, 1146-48 (D. Nev. 2010), citing Lubin v. Kunin, 17 P.3d 422, 428 (2001). 

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Whether the common interest privilege applies is a question of law for the court. Circus 

Circus Hotels, Inc. v. Witherspoon, 657 P.2d 101, 105 (Nev. 1983). If the court 

determines that the privilege applies, the plaintiff then bears the burden of proving the 

defendant published the communication with actual malice. Id. 

Here, Porter disclosed Genberg’s termination to the company’s investor relations 

consultant and three managing members of the secured lenders for Ceragenix. He also 

disclosed the termination through the filing of the Form 8-K with the SEC. Porter argues 

that the recipients of the Painter email and the lender email “needed to be informed of 

Genberg’s discharge” because the lenders “had a large financial stake in Ceragenix” 

and “Painter would be fielding shareholder questions about the [Form 8-K].” Reply, 

ECF No. 237, p. 18. Neither Painter nor the lenders was an employee of Ceragenix, 

nor members of the BOD, but they did have a corresponding interest in the implications 

of Genberg’s discharge, and Painter had a duty to respond to any investor inquiries 

regarding Genberg’s departure from Ceragenix. Likewise, Porter had a duty to file a 

Form 8-K with the SEC, under the requirements as described in Item 5.02(b) of the 

Form. Accordingly, the common interest privilege applies to Porter’s good faith 

communications to Painter, the lenders, and to his disclosure in the Form 8-K. 

The burden shifts, therefore, to Genberg to prove that Porter acted with actual 

malice in publishing the statements. Actual malice means the defendant knew the 

statement was false, or exhibited a reckless disregard for the statement's truth. 

Williams, 688 F. Supp. 2d at 1147. Reckless disregard for the truth means a high 

degree of awareness of the statement's probable falsity. Id. A plaintiff meets this 

stringent burden by presenting “sufficient evidence to conclude that the defendant in 

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fact entertained serious doubts as to the truth of the publication.” Id. (citation omitted). 

The inquiry thus concerns “the defendant's belief regarding truthfulness of the published 

material rather than on the defendant's attitude toward the plaintiff.” Id. (citation 

omitted). Genberg, citing Colorado law, argues that the issue of actual malice is one for 

the jury to decide. Id. However, under Nevada law, the question of actual malice goes 

to the jury only if there is sufficient evidence for the jury to reasonably infer that the 

publication was made with actual malice. See Circus Circus, 657 P.2d at 105. 

As to the Painter and lender emails, Genberg offers no argument or case law 

against the idea that Painter and the lenders were legitimate recipients of 

communications under the common interest privilege. He offers only an argument that 

the Painter email meets the standard for actual malice because Porter used the word 

“Judas” with anti-Semitic and malicious intent. ECF No. 236, p. 54. The Painter email 

refers to Genberg’s actions as part of a “hostile takeover assault” and notes that 

Genberg had acted as “the Judas in house facilitating [the] takeover.” ECF No. 235, p. 

12. Genberg argues that Porter has “an ugly attraction to racially bigoted humor” 

against different racial groups, and a “fondness for ‘Jew jokes.’” ECF No. 236, p. 54. 

He argues that “the sins attributed to Judas – avarice and betrayal – have been used by 

anti-Semites throughout the centuries to attack Jews as they view Judas as the 

archetypal Jew including Nazi propaganda.” Id. at 25. 

These arguments for actual malice, however, fail to meet the standard. Genberg 

must demonstrate that Porter knew the statements were false, that he exhibited a 

reckless disregard for the truth of the statement, or that he entertained serious doubts 

as to the truth of the statement. The inquiry concerns Porter's belief regarding 

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truthfulness of the published material, not his attitude toward Genberg. Porter argues 

that he used the word “Judas” to convey the idea that Genberg had betrayed the trust of 

the company. Genberg offers no evidence to support the argument that Porter 

entertained serious doubts about the truth of that statement. In fact, the record 

indicates that Porter believed that Genberg had breached his duty of loyalty to the 

company. The fact that Porter used an arguably offensive word in his statement does 

not mean that the standard is met to show actual malice, and Genberg offers no case 

law to support the argument that it does. 

As to the Form 8-K, Genberg argues that Porter published more than what is 

required, and that this demonstrates actual malice. He notes that Item 5.02(b) requires 

only a disclosure that the termination occurred and the date that it occurred. However, 

the addition of language that Genberg was terminated for cause after an investigation 

does not satisfy the standard for actual malice. Genberg must demonstrate that Porter 

knew the statements were false, or that he exhibited a reckless disregard for the truth of 

the statements. In fact, the record demonstrates that Porter believed the statements 

were true – that Genberg was fired for cause after an investigation. Accordingly, 

Genberg has not met his burden to demonstrate actual malice. 

V. CONCLUSION

For the reasons set forth herein, it is hereby

ORDERED that Defendant Steven S. Porter’s Motion for Summary Judgment 

(ECF No. 235) is GRANTED, and Plaintiff’s claims of Sarbanes-Oxley Act Retaliation 

and Defamation are dismissed with prejudice. Each party shall bear their own costs 

and attorneys’ fees. 

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Dated: August 11, 2016

BY THE COURT:

s/ Wiley Y. Daniel 

Wiley Y. Daniel

Senior United States District Judge

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