Contract analysis

I. INTRODUCTION Defendants Grizzly Peak Research LLC ("GPR"), Grizzly Peak Capital Partners LP ("GPCP"), and Tobias Fenchurch (collectively, "Defendants") filed their Special Motion to Strike under California Code of Civil Procedure section 425.16 (the "anti-SLAPP statute") on April 12, 2024. Plaintiff Redstone Gaming Corp. ("RGC" or "Plaintiff") respectfully submits this Opposition and urges the Court to deny the mo

II. STATEMENT OF FACTS A. The Parties

1. Plaintiff Redstone Gaming Corp. Plaintiff Redstone Gaming Corp. is a Nevada corporation with its principal executive offices located at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. (Declaration of Derek Olafson ("Olafson Decl."), ¶ 3.) RGC is publicly traded on the Nasdaq Global Select Market under the ticker symbol RDGM. (Id. ¶ 4.) RGC's registered agent in Nevada is National Statutory Agents,

2. Defendant Grizzly Peak Research LLC Defendant Grizzly Peak Research LLC is a Delaware limited liability company with its principal office located at 44 Maiden Lane, 7th Floor, San Francisco, California 94108. (Olafson Decl. ¶ 12; Exhibit 6.) GPR's registered agent in Delaware is Pacific Corporate Services LLC, 1209 Orange Street, Wilmington, Delaware 19801. (Id.) GPR publishes short-seller research reports targeti

3. Defendant Grizzly Peak Capital Partners LP Defendant Grizzly Peak Capital Partners LP is a Delaware limited partnership with its principal office at the same address as GPR: 44 Maiden Lane, 7th Floor, San Francisco, California 94108. (Olafson Decl. ¶ 20.) GPCP is an affiliated hedge fund with estimated assets under management of approximately $185 million. (Id. ¶ 21.) GPCP's General Partner is Grizzly Peak Capital

4. Defendant Tobias Fenchurch Defendant Tobias Fenchurch is an individual who, upon information and belief, resides in San Francisco, California. (Olafson Decl. ¶ 25.) Fenchurch is the Managing Member of GPR and the sole managing member of Grizzly Peak Capital GP LLC, the general partner of GPCP. (Id. ¶ 26.) In both capacities, Fenchurch exercises sole and exclusive control over the publication of GPR's research repo

1. Report 1: "House of Cards: Redstone Gaming's Manufactured Earnings" GPR published its first report on February 7, 2024. (Exhibit 1.) The report, entitled "House of Cards: Redstone Gaming's Manufactured Earnings," was approximately 48 pages in length. (Id.) The report alleged that RGC had fabricated approximately $410 million in fiscal year 2023 revenue through fictitious intercompany transactions between RGC's ope

2. Report 2: "Rigged Reels: How Redstone's Slot Software Cheats the Regulators" GPR published its second report on February 14, 2024 — exactly one week after Report 1. (Exhibit 2.) The report, entitled "Rigged Reels: How Redstone's Slot Software Cheats the Regulators," was approximately 36 pages in length. (Id.) The report alleged that RGC had manipulated the random-number-generator ("RNG") software embedded in its p

3. Report 3: "Double Down on Fraud: Redstone's Related-Party Shell Game" GPR published its third and final report on February 21, 2024 — again, exactly one week after the previous report. (Exhibit 3.) The report, entitled "Double Down on Fraud: Redstone's Related-Party Shell Game," was approximately 29 pages in length. (Id.) The report alleged that RGC's CEO, Marcus J. Calloway, had engaged in undisclosed related-par

1. Revenue-Fabrication Allegation Disproven The allegation that RGC fabricated approximately $410 million in fiscal year 2023 revenue through fictitious intercompany transactions is false. RGC's independent auditor, Pinnacle Audit & Advisory LLP, has confirmed the accuracy of RGC's reported revenue of $3.42 billion for fiscal year 2023. (Ng Decl. ¶¶ 6–8.) Pinnacle issued clean (unqualified) audit opinions on RGC's co

2. RNG-Manipulation Allegation Disproven The allegation that RGC manipulated its RNG software to inflate payout statistics reported to the Nevada Gaming Control Board is false. Following the publication of Report 2, the Nevada Gaming Control Board initiated an independent audit of RGC's RNG systems. (Olafson Decl. ¶ 47.) On March 29, 2024, the Board completed its audit and issued a letter clearing RGC of any manipula

3. Related-Party Allegation Disproven / Misleading The allegation regarding undisclosed related-party transactions involving Vermilion Holdings LLC was based on incomplete information and was materially misleading. Following the publication of Report 3, the SEC opened an informal inquiry into the allegations in March 2024. (Olafson Decl. ¶ 50.) RGC cooperated fully with the SEC's inquiry, producing all requested docu

III. LEGAL STANDARD A. The Two-Prong Anti-SLAPP Framework Under § 425.16 California's anti-SLAPP statute, Code of Civil Procedure section 425.16, provides a procedural mechanism for the early dismissal of meritless lawsuits that arise from acts in furtherance of the constitutional rights of petition and free speech. (§ 425.16, subd. (a); Navellier v. Sletten (2002) 29 Cal.4th 82, 85; Bonni v. St. Joseph Health System

Section 425.17, subdivision (c), provides a critical exemption from the anti-SLAPP statute. It states: "Section 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services, including, but not limited to, insurance, securities, or financial instruments, arising from any statement or conduct by that person if both of the following condi

IV. ARGUMENT A. Prong One: Defendants' Reports Do Not Arise from Protected Activity

1. The Commercial-Speech Exemption of § 425.17(c) Applies The threshold question in this case is whether the anti-SLAPP statute applies at all, or whether Defendants' publications fall within the commercial-speech exemption of Code of Civil Procedure section 425.17, subdivision (c). The answer is clear: the exemption applies, and the anti-SLAPP motion should be denied without reaching Prong Two. a. GPR Is Primarily E

Section 425.17(c) applies to persons "primarily engaged in the business of selling or leasing goods or services, including, but not limited to, insurance, securities, or financial instruments." GPR is primarily — indeed, exclusively — engaged in the business of publishing short-seller research reports. (Olafson Decl. ¶ 13.) GPR's business model is to generate revenue through two channels: (i) subscription fees from i

2. Even Absent the Commercial-Speech Exemption, the Reports Are Not Protected Activity Under § 425.16(e) Even if the Court were to conclude that the commercial-speech exemption of section 425.17(c) does not apply — which Plaintiff respectfully submits would be error — the anti-SLAPP motion should still be denied at Prong One because Defendants' reports do not constitute protected activity under section 425.16(e). Def

1. Trade Libel (First Cause of Action — Cal. Civ. Code § 46(3)) Trade libel, also known as injurious falsehood or disparagement, is defined as "a publication of matter derogatory to the plaintiff's business in general, or to its quality or character, made with knowledge of its falsity or with reckless disregard as to its truth." (Cal. Civ. Code, § 46, subd. (3); see also Restatement (Second) of Torts, § 623A (1977);

2. Intentional Interference with Prospective Economic Advantage (Second Cause of Action) To establish a claim for intentional interference with prospective economic advantage, the plaintiff must show: (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional wrongful acts by