*

Gotham claimed Grifols overstated earnings, understated

debt

*

Report sent Grifols shares tumbling

*

Drugmaker says shortseller's accusations were defamatory

(Adds details from court document in paragraphs 2-4 and 11,

Grifols comments in paragraph 5, Gotham City comments in

paragraphs 9-10)

MADRID, May 30 (Reuters) - A New York court has found

enough evidence to proceed with a defamation lawsuit filed by

Grifols against short seller Gotham City Research,

though it dismissed many of the Spanish pharmaceutical company's

claims.

The Federal District Court for the Southern District of New

York rejected a request filed by Gotham City to dismiss the

lawsuit, according to a ruling filed on Thursday.

The court found that there was enough evidence to support

Gotham's allegations that Grifols failed to disclose a $95

million loan to Scranton Enterprises, an entity tied to the

drugmaker's founding family, were defamatory.

However, it dismissed the company's claim of unjust

enrichment and illegal interference and said many comments made

by Gotham City were expressing no more than non-actionable

opinions.

"The company continues defending its interests against what

it considers a speculative attack based on misleading

information," Grifols said in a statement on Friday.

In January 2024, Gotham City, which had previously

shorted Grifols shares, released a report accusing the company

of overstating earnings and understating debt. Grifols denied

the allegations but lost around a third of its market value

following the report.

Short selling involves borrowing a stock to sell it in the

expectation the price will fall, then buying it back at the

lower price and pocketing the difference.

Gotham City welcomed the ruling.

"We are pleased that the court has dismissed the vast

majority of Grifols' claims, reaffirming that our report is

largely protected opinion and falls within the bounds of free

expression," it said in an emailed statement.

"We remain confident in the integrity of our research

and stand by our work," it added.

In its judgement, the court said that even though short

sellers have an economic interest in driving down a company's

stock price, they have "the same right to express opinions and

analysis as any other market participant".

Grifols has

previously said

it was seeking "injunctive and monetary relief" via its

lawsuit and would seek compensation at least equivalent to its

share price loss.