Petition for Writ of Certiorari — McFarlane v. Esquire Magazine

Supreme Court brief1996

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95176 9 APR 29 199%

No. 8

Supreme Court of the United States

October Term, 1995

ROBERT C. McFARLANE,

Petitioner,

vs.

ESQUIRE MAGAZINE, et al.,

Respondents.

Petition for Writ of Certiorari to the United States Court

of Appeals for the District of Columbia Circuit

PETITION FOR WRIT OF CERTIORARI

FORREST A. HAINLINE III

Counsel of Record

Attorney for Petitioner

1100 Connecticut Avenue, N.W.

Suite 1200

Washington, D.C. 20036

(202) 466-2370

8753

ere. (800) 3. FEN · (800) 5 APPEAL · (800) BRIEF 21

inc.

QUESTIONS FOR REVIEW

1. In a case governed by New York Times v. Sullivan, does a

publisher act with actual malice when it publishes without

corroboration highly defamatory accusations of an informant the

publisher acknowledges is a liar?

2. Inacase governed by New York Times v. Sullivan, cana

publisher avoid a finding of actual malice by claiming that it

trusts areporter who has relied upon an acknowledged liar, when

the publisher knows that the reporter has no independent

corroboration for the liar’s statements?

3. In a case governed by New York Times v. Sullivan, does a

publisher act with actual malice when it advocates the

believability of an untruthful informant, and fabricates and

suppresses material information which could lead a reader to

discredit the publisher's endorsement?

4. Is the New York Times v. Sullivan standard so purely

subjective that admitted review of information showing a

publication’s falsity will not constitute actual malice unless the

publisher confesses to his thoughts concerning the material?

5. Inacase governed by New York Times v. Sullivan, may a

court disregard evidence of actual malice through a weighing of

evidence the court acknowledges would support a conciusion of

recklessness?

6. Cana publisher be liable under respondeat superior for

defamatory statements concerning a public figure made with

actual malice by a writer “assigned” by the publisher to “cover” a

story, when the publisher edits, approves and shapes the

defamatory product?

7. Should the actual malice requirement of New York Times

v. Sullivan be reexamined, when its “daunting” standard allows

the publication of defamatory falsehoods invented by an

acknowledged liar?

8. The Court of Appeals for the District of Columbia Circuit

constructed DC Code § 13-423(a)(3) as separating the “act” of

libel from the “injury” it causes. Is the separation of “act” from

“injury” for the tort of libel inconsistent with Keeton v. Hustler

Magazine, 465 U.S.770(1984), which recognized that the tort of

libel occurs “wherever the offending material is circulated,” and

based upon an impermissible extension of procedural safeguards

to protect First Amendment rights in violation of Calder v. Jones,

465 U.S. 783 (1984)?

iii

PARTIES TO THE PROCEEDINGS

The parties to the proceedings in the Court of Appeals are:

Petitioner Robert C. McFarlane resides in the District of

Columbia. McFarlane was plaintiff in the district court and

appellant inthe United States Court of Appeals for the District of

Columbia Circuit.

Respondent Esquire Magazine is an unincorporated

business with its principal place of business in New York City.

Esquire was a defendaut and appellee below. Respondent the

Hearst Corporation Is a Delaware corporation with its principal

place of business in New York City. Hearst owns and publishes

Esquire, and was a defendant and appellee below. Esquire and

Hearst will be referred to collectively as “Esquire.”

Respondent Craig Unger resided in New York City at the

time the suit was brought. Unger was a defendant and appellee

below.

TABLE OF CONTENTS

Page

Questions Presented for Reviess i

Parties to the Proceedings iii

LL iv

Tee CE CHINES on cece ccccccccccccscccescccccs vii

Opinions Beloůů uk 1

Statement of Jurisdictioo nnn l

Constitutional Provision Involved l

Statement of the Cassse 2

.. .o. eee 2

A. October Surprise and Its Falsity ......... 2

B. The Defamatory Article 2

C. Esquire’s Acknowledged Doubts About the

Credibility of Its Sole Source, Ari Ben-

r 4

D. Esquire Advocates Ben-Menashe’s

. cccccccccsccccceccescess 5

E. The Fabricated Endorsment of Ben-

Menashe’s Credibility ............+«++- 7

)

| Contents

: F. The False Report of McFarlane’s Refusal to

| Gs Pak pbassicc sd isdést ened. vos

II. TheCourtofAppeals’Opinion ......... *

A. The Acknowledgement Shield

B. The Trusted Reporter Shield

f C. Ignoring the Creation of Ben-Menashe’s

reer

D. The Shield of Confession

E. WeighingofEvidence .................

1. False Description of the Affidavit ....

2. Falsification of Richardson's Supposed

Endorsement of Ben-Menashe’s

eee lee ee

3. Fabrication of the Statement That

McFarlane Refused to Comment

F. Refusal to Attribute Unger’s Actual Malice to

ene eee

G. Dissection of Speech from Hearing

Reasons for Granting the Writ

Page

II.

III.

IV.

VII.

Contents

The Court of Appeals’ Disclosure Shield Conflicts

with St. Amant v. Thompson and Raises a

Bastardized Version of the Neutral Reportage

Doctrine to Constitutional Status

The Court of Appeals’ Trusted Reporter Shield

Also Conflicts with St. Amant v. Thompson, and

Invents a Novel Method to Escape Liability for

Publishing Statements of a Known Liar.

The Court of Appeals’ Opinion Conflicts with Sr.

Amant v. Thompson and Masson v. New Yorker

Magazine by Allowing the Fabrication of an

Endorsement of Ben-Menashe’s Credibility.

The Court of Appeals’ Confessional Shield, and

Rule of Absolute Subjectivity, Conflicts with St.

Amant v. Thompson ses da

The Court of Appeals’ Weighing of the Evidence

Conflicts with Anderson v. Liberty Lobby. .....

. Certiorari Should Be Granted to Clarify the Extent

to Which a Principal Can Be Liable for the Actual

Malice of its Agent in a Public Figure Libel Case.

Certiorari Should be Granted to Re-examine New

22:2 .

Page

vii

Contents

Page

VIII. The Separation of the Act of Libel from Its Injury

Conflicts With Both Keeton v. Hustler Magazine

le Fe PP ee 27

en 28

TABLE OF CITATIONS

Cases Cited:

Anderson v. Liberty Lobby, 477 U.S. 242 (1986) ....21,22,29

Calder v Jones, 465 U.S. 783 (198 ii. 27. 28

Cantrell v. Forest City Publishing Co., 419 U.S. 245

Z4„4%4FSFTFõàW . 21.25

1 19

en dees 28

Edwards National Audubon Society, Inc., 556 F.2d 113

(S. DN. v. 1977), cert. denied, 434 U.S. 1002 (1977)

Gertz v Robert Welsh, 418 U.S.323(1974) .......... 26

Gertz v. Robert Welsh, 680 F.2d 527 (7th Cir. 1982) 24

viii

Contents

Page

Keeton v. HustlerMagazine, 465 U.S.770(1984) ....ii,27,28

Masson v. New Yorker Magazine, 501 U.S. 447 (1991)

— TTT ee OT PT PTT TT eT Tee 20

Masson . New Yorker Magazine, 832 E. Supp. 1350(N.D.

n. 24

Moncrief v. Lexington Herald-Journal Co., 807 F.2d 217

rene 18. 27. 28

New York Times v. Sullivan, 376 U.S. 254 (1964)

n i, ii, 1. 21. 24, 25, 26, 29, 30

Pavelic & Le Flore v. Marvel Entertainment Group, 493

Lr 13

Price v. Viking Penguin, Inc., 88 1 F.3d 1426 (8th Cir. 1989)

„„es tete e este eee eee. 24

St. Amant v. Thompson, 390 U.S. 727 (1968) 13, 18. 19. 20. 21

Statutes Involved:

aer. . . TTL dete l

PRT TT PUTT TITTITT TTT Te 1

rd. een. l

AS. SOBRE . eee ii, 27

Contents

Page

United States Constitution Cited:

PIED wu bos de ues cb USUb 66d00 eee es eee 1,25,29

Other Authorities Cited:

Becker, “Pressure Groups and Political Behavior,” in

Capitalism and Democracy: Schumpter Revisited

120 (Coe and Wilbur eds. 198 25. 26

Fallows, Breaking the News, How the Media Undermine

American Democracy (New York, 1996) .......... 26

Kalt and Zupan, “Capture and Ideology in the Economic

Theory of Politics,” 74 American Economic Review

en optassesrescesvececoeves 26

Posner, Sex and Democracy (1992) .............445: 21

Reisman, Democracy and Defamation: Fair Game and

Fair Comment J. 42 Col. L. Rev. 1085(1942) ...... 26

Stigler, The Citizen and the State: Essays on Regulation

447“ ehebotksd sebhin tive (tee avecses 25

APPENDIX

Appendix A - Court of Appeals Opinion Dated January

D eee eee 1a

ere ess 23a

Contents

Page

Appendix C Order Filed June 8,1994 ............. 59a

Appendix D Order Filed June 8, 199 60a

Appendix E— Memorandum Opinion Filed May 27, 1993

TIVTTITC Titi es re ee ee 61a

Appendix F Order Filed May 27, 1993 ............ 100a

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

District of Columbia Circuit is published at 74 F.3d 1296; the

district court’s opinion is published at 22 MediaL. Rep. 2033,

and is found at 1994 WL510088.

STATEMENT OF JURISDICTION

1. The Court of Appeals rendered its decision on January

30, 1996.

2. Jurisdiction to consider this petition exists under 28

U.S.C. § 1254(1).

3. The District Court had original jurisdiction to consider

the matter under 28 U.S.C. § 1332. The Court of Appeals had

appellate jurisdiction under 28 U.S.C. § 1291.

CONSTITUTIONAL PROVISION INVOLVED

The First Amendment to the United States Constitution

provides:

Congress shall make nolaw. . . abridging the

freedom of speech, or of the press.

In New York Times v. Sullivan, 376 U.S. 254, 279-280 (1964), this

Court held the First Amendment to mean:

The constitutional guarantees require, we

think, a federal rule that prohibits a public

official from recovering damages for a

defamatory falsehood relating to his official

conduct unless he proves that the statement

was made with “actual malice” — that is,

with knowledge that it was false or with

reckless disregard of whether it was false or

not.

STATEMENT OF THE CASE

I. The Facts

Facts material to this petition are, for the most part, in the

Court of Appeals’ opinion.

A. October Surprise and Its Falsity

In the late 80’s and early 90's, articles appeared in the

American Press asserting an “October Surprise” — a scheme by

members of the 1980 Reagan-Bush campaign team to thwart

President Carter's efforts to negotiate the release of Iran’s

American hostages by inducing the Iranians to delay their

agreement. Ultimately (in January 1993) a bipartisan task force

of the House of Representatives emphatically rejected these

claims. See Joint Report of the Task Force to Investigate Certain

Allegations Concerning the Holding of American Hostages by

Iran in 1980, H. Rep. No. 102-1102 (102d Cong., 2d Sess.)

(“Task Force Report”). Opinion at 2.

B. The Defamatory Article

In the meantime, however, Unger wrote and Esquire

published an article sketching out the conspiracy theory in lurid

terms. The magazine’s October 1991 cover asked, “Did the

Republicans conspire with Iran and Israel to delay the release of

the hostages and steal the 1980 presidential election?” The

article's answer appeared to be a qualified Yes. Opinion at 2. But

any qualification was muted; the article's lead stated: What

matters is that covert action took place that sabotaged our

government.”

“In a breathless and kaleidoscopic account rivaling an

Oliver Stone movie,” Unger writes that McFarlane, while an aide

to Senator Tower, attended a February 1980 meeting with Iranian

officials in Teheran — a meeting that “helped set up later

meetings in Madrid, which in turn paved the way for the crucial

October rendezvous in Paris.” In the “October rendezvous”

George Bush and William J. Casey are supposed to have closed

the deal by which Iranians stalled hostage negotiations in

exchange for promises of arms. The Task Force Report found

that the records and testimony “conclusively prove candidate

George Bush’s whereabouts in October 1980,” and that he did

not travel to Paris in the period alleged. It is not said just how the

February meeting “helped set up” later meetings (or how those

“paved the way” for the supposed climax in Paris), but in the

course of the account the defendants used language effectively

calling McFarlane an Israeli spy. The article quotes from Ari

Ben-Menashe, a self-professed former Israeli spy and a major

source for conspiracy theorists:

In February 1980, Ben-Menashe says,

Robert “Bud” McFarlane, then an aide to

Senator John Tower, and Earl Brian, a

businessman who had been secretary of

health in Reagan’s California cabinet, met

highly placed Iranian officials in Teheran. In

a sworn affidavit submitted by Elliot

Richardson on behalf of one of his clients, a

computer-software company called Inslaw,

Ben-Menashe states that both McFarlane and

Brian had a “special relationship” with

Israeli intelligence, McFarlane having been

recruited by Rafi Eitan, a legendary Israeli

agent who was the model for a leading

character in John LeCarre's Little Drummer

Girl. “McFarlane was the famous Mr. X in

the Pollard case,“ adds Ben-Menashe,

referring to the trial of Jonathan Pollard, an

American convicted of spying for Israel. In

Pollard’s case there were persistent

allegations about another, unnamed

American who secretly worked for the

Israelis.

Both McFarlane and Brian have declined

comment.

McFarlane and Brian’s visit, Ben-

Menashe says, helped set up later meetings in

Madrid, which in turn paved the way for the

crucial October rendezvous in Paris.

Opinion at 2-3.

C. Esquire’s Acknowledged Doubts About the Credibility

of Its Sole Source, Ari Ben-Menashe

Ben-Menashe is the source for many of the details in

October Surprise, including the ones in the passage under attack

in this case. Several of Unger’s sources made clear to him their

belief that Ben-Menashe was a liar, and Esquire does not deny its

awareness of these views; it couldn’t, as the article passed a

substantial chunk of them through to the readers. The article

directly quotes a former CIA officer and a Washington Post

journalist as calling him, respectively, a “liar” and a “con man.”

It notes that when he took a lie detector test he “failed miserably,”

and it quotes an ABC News producer as saying that in the lie

detector test Ben-Menashe “goes way off the chart on all relevant

questions. My theory is that a lot of what he says is true, but that

Ari exaggerates his own role and muddies the water.” Opinion at

12-13.

D. Esquire Advocates Ben-Menashe’s Credibility

The Esquire article advocates Ben-Menashe’s credibility.

After disclosing that “some intelligence figures and journalists

in the U.S. and Israel say Ari Ben-Menashe is a fake,” the article

continues:

Yet it's almost impossible to dismiss him

Flormer attorney general Elliot Richardson,

a staunch Republican who emerged as the

moral hero of Watergate after he refused

President Nixon’s order to fire Special

Prosecutor Archibald Cox and resigned

instead, has submitted sworn affidavits by

Ben-Menashe on behalf of a client. A

standard legal gambit, perhaps, but

Richardson finds Ari Ben-Menashe a

compelling witness. “I take him seriously as

being who he says he is,” says Richardson.

Esquire’s press release touted:

“Compared to the October Surprise,” says

former attorney general Elliot Richardson,

“Watergate was an innocent chiid’s frolic.”

Throughout the article, the truth of the October Surprise

conspiracy is championed. The first page prociaims in large

type: “Eleven years ago this month, while no one was watching,

the CIA and the Reagan-Bush campaign may have committed an

act of highest treason. Did they plot to delay the release of the

hostages from Iran and steal a presidential election? A tale of

international conspiracy and double-dealing.” The article

asserts:

* One can almost make a prima facie case that

surreptitious deals did take place.

Lay their stories on top of one another like the

anatomical transparencies in a medical

textbook and you have a shocking picture of a

body politic diseased with corruption at the

highest level.

* Granted, it would have been horrific to arm Iran

as areward for prolonging the imprisonment of

Americans. But more appalling is the

likelihood that the CIA helped engineer the

whole thing.

And yet, after more than 150 interviews with

sources in and out of the government, and after

reviewing thousands of pages of records, I

believe a compelling case can be made that in

1980, this country experienced its first and only

coup d’etat and never knew a thing.

Compared to the October Surprise,” says

former attorney general Elliot Richardson,

Watergate was an innocent child's frolic.“

Here’s how it happened.

* “October Surprise” also displays color

1. Esquire’s reviewed Unger’s Richardson interview, where Richardson

said he knew nothing about October Surprise, and compared Watergate to his

hobby horse, Inslaw.

photographs of presidents Reagan and Bush

along side pictures of the Ayatollah Khomeni

and Ben-Menashe as “co-conspirators.”

E. The Fabricated Endorsement of Ben-Menashe’s

Credibility

The claim that McFarlane was an Israeli spy, McFarlane's

supposed participation in the October Surprise conspiracy, and

the believability of October Surprise, all depend upon Ben-

Menashe being believed. Ben-Menashe's believability depends

upon the endorsement of Elliot Richardson, whom the article

dubs the “moral hero of Watergate.”

First, the article conveys that a Richardson-filed and

endorsed affidavit of Ben-Menashe accuses McFarlane both of

having been “recruited” by Israeli intelligence, and also of being

the “Mr. X” for convicted spy Jonathan Pollard. As the Court of

Appeals recognized, the statement has a “serious flaw.” “Its

latter part, beginning with ‘McFarlane having been recruited by

Rafi Eitan,’ is not in the affidavit. Nor indeed is there anything

in the affidavit remotely supporting the statement in the article's

following sentences, making McFarlane out to be an equivalent

of Pollard a spy who pled guilty to, in effect, selling masses of

top secret U.S. materia! to the Israelis.” Opinion at 16.

Second, the article quotes Richardson as saying:

And former attorney general Elliott [sic]

Richardson . . . has submitted affidavits by

Ben-Menashe on behalf of a client. A

2. Before pictures were set in page proofs, Esquire's personne! wrote:

“Caption goes here about all these people and how they destroyed our

remaining faith in the government.”

standard legal gambit, perhaps, but

Richardson finds Ari Ben-Menashe a

compelling witness. “I take him seriously as

being who he says he is,” says Richardson.

Unger’s earlier draft has Richardson saying: “Quite apart from

what he knows, I take him seriously as being who he says he is.”

Unger’s notes, which Esquire’s editors reviewed, quote

Richardson:

Ben-Menashe is who he says he is and he does

know alot, quite apart from what he says

about the October dealings. One thing that is

true of people like him is that they live in a

world of such constant deception that they

are used to moving without misstep between

truth and fabrication. So he doesn’t help

much with the October Surprise story to

verify the truthfulness.

Esquire’s editors removed the qualification, “Quite apart from

what he knows,” from Unger’s draft, Opinion at 17-18, and

conveyed that Richardson was vouching for Ben-Menashe as a

source knowledgeable about the October Surprise. Unger's

notes also quote Richardson as saying:

Idon’thave any firm views on the credibility

of Ben-Menashe.

We used his affidavit for what it is worth,

because it lent color to our need for

discovery.

I can’t tell if the son of a bitch is telling the

truth.

If what he says about McFarlane is true, I

have no idea.

If October Surprise happened it was

despicable; whether it happened, I don’t

know.

Inslaw . . Watergate was an innocent child's

frolic compared to this.

Ungerꝰs uncontradicted testimony is that he gave Esquire a

draft of October Surprise with Richardson being quoted as

saying, “I can’t tell if the son of a bitch is telling the truth.”

Opinion at 18. The editors removed it, with the purpose,

according to Unger, of “maintaining the integrity of what Mr.

Richardson said.” The Court of Appeals observed that “This

appears to be some sort of jargon for suppressing material

inconsistent with a broad effort to build up Ben-Menashe’s

credibility.” Opinion at 18.

F. The False Report of McFarlane’s Refusal to Comment

In the last stages of editing, Esquire changed the article's

treatment of McFarlane’s response to the charges. “McFarlane

... denied the charges” became “McFarlane ... refused

comment.” Opinion at 19.

Unger had written a letter to McFarlane, requesting an

interview. “There was not a clue [in Unger’s letter] as to the

depths of the charges (‘By the way, I plan to accuse you of being

an Israeli spy.’)” Opinion at 19. McFarlane replied the same day

saying that he had no way of knowing if the assertions were true,

and would be “of little help.” Esquire’s editors saw Unger’s

letter and McFarlane’s response.

Il. The Court of Appeals’ Opinion

The Court of Appeals affirmed a summary judgment for

Esquire based upon its conclusion that McFarlane had not shown

actual malice with the necessary clear and convincing evidence.

The court affirmed a dismissal of McFarlane’s claims against

Unger for lack of personal jurisdiction. The key elements of the

court's opinion are the following:

A. The Acknowledgement Shield

The court created a novel “acknowledgement shield” which

held that “full (or pretty full) publication of the grounds for

doubting a source tends to rebut a claim of malice, not to

establish one.” Opinion at 13. The court disclaimed: “We are

not, of course, saying that one may altogether shield a

defamation simply by including the source’s reputation as a liar.”

Opinion at 13. However, the Court does not suggest when

acknowledgment that a source is a liar would not be a shield.

The acknowledgement shield protects even a publisher

which advocates the believability of an untruthful informant,

and omits and suppresses material information which could lead

a reader to discredit the publisher's endorsement. Esquire

advocated Ben-Menashe’s believability (against the

disclaimers) in large part based on the endorsement of Elliot

Richardson, “moral hero.” But Richardson told Unger, and

Unger wrote, “I can’t tell if the son of a bitch [Ben-Menashe] is

telling the truth.” Esquire editors removed the language,

“suppressing material inconsistent with a broad effort to build up

Ben-Menashe’s credibility.” Opinion at 18. The court found this

active deception shielded by the acknowledgement that Ben-

Menashe is a liar:

Still, in view of the article’s inclusion of solid

material damning Ben-Menashe, the

removal gets only limited weight.

Opinion at 18.

B. The Trusted Reporter Shield

The Court of Appeals also created a novel “trusted

reporter shield,” which immunizes the publication of a known

liar’s accusations, if they are filtered through a “trusted

reporter,” even though the reporter has done nothing to

corroborate the liar’s story. The court stated:

And the editors relied on Unger’s record; he

had worked with Esquire editor David

Hirshey on two earlier pieces, and Hirshey

had found him “exemplary.” Reliance on a

reporter's reputation can indeed show a lack

of actual malice by a publisher.

Opinion at 13. However, Esquire’s editors knew that Unger was

relying upon Ben-Menashe for the defamatory statements

concerning McFarlane; they knew that Ben-Menashe was a liar,

and they knew that Unger had no corroboration for Ben-

Menashe’s statements.

C. Ignoring the Creation of Ben-Menashe’s False

Pedigree

The Court of Appeals discusses, but then ignores, that

Esquire “artificially boosted Ben-Menashe’s credibility,

fabricating a ‘pedigree’ for him with quotations from Elliot

Richardson — referred to in the article as the ‘moral hero’ of

Watergate — purporting to show that Richardson took Ben-

Menashe seriously.” Opinion at 15. Although the court seemed

to recognize that Richardson's supposed endorsement is central

to the effort at persuading readers to believe a liar, and although

the court recognized ways in which the endorsement was

fabricated, the court refused to accept the fabricated

endorsement as constituting actual malice.

D. The Shield of Confession

The Court of Appeals treated the actual malice standard as

being radically subjective, as requiring an act of confession as a

predicate for liability.

The Court of Appeals admitted to being “troubled” by

evidence which showed that Esquire’s editors drafted language

conveying that Elliot Richardson vouched for Ben-Menashe as

a source knowledgeable about the October Surprise, when they

reviewed documents in which Richardson told Unger that Ben-

Menashe knew nothing about October Surprise. The same

documents revealed that Richardson did not know if Ben-

Menashe was telling the truth, and did not know if Ben-

Menashe’s statements about McFarlane were true. Opinion at

17-18. Nevertheless, the Court found no evidence of actual

malice because Esquire’s editors did not confess to being

troubled themselves:

As Esquire put most of its eggs in the Ben-

Menashe basket, both for October Surprise

generally and for the accusation against

McFarlane, this seems a sharp renunciation

of its star witness by his putative champion.

The statement is in Unger’s notes of his talks

with Richardson, and it is undisputed that

Mark Warren browsed in precisely those

notes. But at notime, so far as we can tell, did

McFarlane’s counsel ever ask Warren

whether he'd spotted this passage and, if so,

what he made of it. Accordingly, its

presence, though puzzling, cannot much help

McFarlane.

Opinion at 18.

Actually, Editor Warren was asked about his review of

Unger's notes. He stated, in what a reasonable jury could find

(consistent with St. Amant v. Thompson) to be an absolute

falsehood:

THE WITNESS: My review of those

transcripts indicated that he, Elliot

Richardson, saw Mr. Ben-Menashe as

knowledgeable and took him seriously.

E. Weighing of Evidence

Throughout its opinion, the Court of Appeals weighed the

evidence, assessed the credibility of the Esquire witnesses, drew

all inferences from disputed facts in Esquire’s favor, and found

“not enough” to show actual malice, even in facts which

“troubled” the court.

J. False Description of the Affidavit

First, the Court of Appeals acknowledged and dismissed the

undisputed fact that Richardson did not “submit” the Ben-

Menashe affidavit as a statement only “technically false.”

Opinion at 15. Ajury might reasonably place importance on the

assertion that Richardson submitted the affidavit — not that “he

was on a legal team for Inslaw.” Opinion at 15. See Pavelic &

LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 124

(1989). A reasonable juror might conclude that a lawyer who

actually submits a sworn affidavit vouches for it more personally

than an anonymous member of a “legal team.”

Second, the court acknowledges that the description of the

affidavit conveys the impression that the sworn document

accuses McFarlane of being a spy in two ways, when the affidavit

itself makes no such accusation. The court dismisses Esquire’s

explanation for the “recruited” accusation as “fanciful.” The

court also recognizes that Esquire’s explanation for the “Pollard

Mr. X” accusation is “pretty thin.” Nevertheless, the court

weighs against finding actual malice:

Esquire offers two answers. First, it argues

that there is “no material difference” between

the “recruited by” and “special relationship”

phrases. This is fanciful. “Special

relationship” seems infinitely elastic, while

“recruited,” in context, suggests a switch of

allegiance to a foreign power. Second,

Esquire’s editors testified that they

recognized that the passage might appear to

suggest that the whole accusation was in the

affidavit, but that they ordered changes —

their recollection was that addition of the

comma — to indicate the contrary... .°

Although we find the comma theory pretty

thin, this imprimatur stretch seems as

consistent with linguistic muddle as with

reckless disregard, and in context not

enough, even in conjunction with other

evidence, to show actual malice by Esquire

editors.

Opinion at 16.

3. Editor Hirshey testified, “[T}here’s a comma in here that suggests that

it's not from the same source.”

The court does not explain how a “fanciful” explanation for

a false charge of espionage can be overcome by a “thin”

“imprimaiur stretch” of a second charge of espionage. Nor does

the court explain how or on what basis it ignored Esquire’s

admitted recognition that a reader could understand the article to

be saying that both claims of espionage (both “recruited” and

“Mr. X in the Pollard case”) were in the affidavit. The court gives

not a clue as to what “context” could possibly justify these

fabrications.

2. Falsification of Richardson's Supposed

Endorsement of Ben- Menashe s Knowledge

Without Richardson’s endorsement, there is no reason for a

reader to believe Ben-Menashe or his story. As the Court of

Appeal recognized, “Esquire put most of its eggs in the Ben-

Menashe basket.” The “Richardson endorsement” is the

cornerstone of Esquire’s star witness. Opinion at 18.

Even though the endorsement is false, and though the Court

recognized that Esquire ignored Richardson’s disavowal of Ben-

Menashe, and then changed Unger’s quotation of Richardson's

statement to make it more misleading, the Court accepted as

credible an Esquire’s explanation which a reasonable jury could

surely reject:

Nonetheless, we think the explanation by

Esquire — that they deleted the clause

because of space considerations* and

because of ambiguity — altogether

plausible. “Quite apart from what he knows”

4. Nearly half the page before Richardson's supposed quotation is filled

with a picture of a sexily dressed woman. A jury might ask, why not quote

Richardson truthfully, and show less cleavage?

could be taken to mean that Richardson

believed Ben-Menashe’s claimed identity

but not his statements, or it could mean that

Richardson wanted to emphasize his belief in

Ben-Menashe’s identity, not simply Ben-

Menashe’s apparent knowledge. The clause

is ambiguous. And with or without it this

Richardson endorsement seems to add up to

very little.

Opinion at 17. The court did not explain how a statement

denoting Ben-Menashe’s “apparent knowledge” could be other

than actually false, when Esquire’s editors knew that Richardson

had no belief in Ben-Menashe’s knowledge or truth telling.

Even though the Court of Appeals recognized the

disingenuity of the explanation for Esquire’s removal from the

article of Richardson’s statement, “I can’ttell if the son of a bitch

is telling the truth,” the court gave the evidence only “limited

weight.”

The editors apparently removed it, with the

purpose, according to Unger, of ‘maintaining

the integrity of what Mr. Richardson said.’

This appears to be some sort of jargon for

suppressing material inconsistent with a

broad effort to build up Ben-Menashe’s

credibility. Still, in view of the article’s

inclusion of solid material damning Ben-

Menashe, the removal gets only limited

weight.

Opinion at 18.

3. Fabrication of the Statement That McFarlane

Refused to Comment

In the last stages of the editing process, Esquire’s editors

changed the article’s treatment of McFarlane’s response to the

charges. “McFarlane ... denied the charges” became

“McFarlane ... refused comment.” Esquire was plainly

conveying that McFarlane was declining to comment upon the

accusation that he was an Israeli spy. Esquire knew that Unger

had never told McFarlane he would be accused of being a spy.

The court weighed this is being only “very careless”:

McFarlane notes that Unger's letter

requesting help from McFarlane was phrased

very blandly, saying that he was about to do

an article on the October Surprise and asking

for an interview. There was not a clue as to

the depths of the charges (“By the way, I plan

to accuse you of being an Israeli spy.”) And

Mark Warren acknowledged having seen a

copy of the letter to McFarlane, and the

latter’s reply, in the editing process. In a later

telephone call, according to McFarlane’s

executive assistant, Unger mentioned

October Surprise and Inslaw, but, again, not

a word about espionage. Thus Warren and

Esquire were on some notice of what had led

to McFarlane’s position. In retrospect, this

looks at least very careless, but not enough to

entangle Esquire in Unger's apparent

misleading, which would be necessary for

Esquire’s behavior to help show actual

malice on its part.

Opinion at 19-20.

F. Refusal to Attribute Unger’s Actual Malice to Esquire

The Court of Appeals found Esquire not liable for Unger’s

misleading because Unger was not an employee of the magazine.

The court recognized that the issue is unsettled, and expressed

some considerable doubt about its holding. Opinion at 10-11.

G. Dissection of Speech from Hearing

The Court of Appeals followed its earlier Moncrief v.

Lexington Herald-Journal Co., 807 F.2d217 (D.C. Cir. 1986), in

which it pronounced that the “act” of libel occurs only where the

libel is written or spoken. The court observed that it is without

power to overrule Moncrief, even if it thought it desirable to do

so. Opinion at 5.

REASONS FOR GRANTING THE WRIT

I. THE COURT OF APPEALS’ DISCLOSURE SHIELD

CONFLICTS WITH ST. AMANT . THOMPSON AND

RAISES A BASTARDIZED VERSION OF THE NEUTRAL

— DOCTRINE TO CONSTITUTIONAL

In St. Amant v. Thompson, 390 U.S. 727, 732 (1968), this

Court observed that reliance upon an untruthful informant is

actual malice, even if the publisher professes good faith. The

Court of Appeals has sidestepped this rule, and created a novel

immunity for a defendant who discloses that the source isa liar.

This acknowledgement shield appears to be a backdoor adoption

of the neutral reportage doctrine as a rule of constitutional law,

in a case where the neutral reportage doctrine would not apply.

The neutral reportage privilege originated in the Second

Circuit with Edwards v. National Audubon Society, Inc. ,556 F.2d

113 (S.D.N.Y. 1977), cert. denied, 434 U.S. 1002 (1977), and

was further explained in Ciani v. New Times Publishing Co., 639

F.2d 54 (2d Cir. 1980). “The neutral reportage privilege will not

apply to a publisher who in fact espouses or concurs in the

charges made by others, or who deliberately distorts these

statements to launch a personal attack of his own on a public

figure.” In such instances he assumes responsibility for the

underlying accusations. Edwards v. National Audubon Society,

Inc., supra, 556 F.2d at 119.

The neutral reportage privilege would not apply to “October

Surprise” because the article is not neutral. There should be no

constitutional privilege to advocate the accusations of an

acknowledged liar.

II. THE COURT OF APPEALS’ TRUSTED REPORTER

SHIELD ALSO CONFLICTS WITH ST. AMANT „.

THOMPSON, AND INVENTS A NOVEL METHOD TO

ESCAPE LIABILITY FOR PUBLISHING STATEMENTS

OFAKNOWN LIAR.

St. Amant v. Thompson recognized that a defendant in a

defamation action brought by a public figure cannot avoid

liability simply by pronouncing that he published in good faith,

particularly where there are reasons to doubt the accuracy of the

informant. 390 U.S. at 732. The Court of Appeals sidestepped

this rule, by creating a privilege to publish doubtful accusations

so long as they are filtered through a trusted reporter. -The

privilege applies even when the trusted reporter also knows that

the source is a liar, and has done nothing to corroborate the

doubtful information.

There should be no constitutional privilege to publish

doubtful information of a known liar, just because it is porously

filtered.

III. THE COURT OF APPEALS’ OPINION CONFLICTS

WITH ST. AMANT v. THOMPSON AND MASSON v. NEW

YORKER MAGAZINE BY ALLOWING’ THE

FABRICATION OF AN ENDORSEMENT OF BEN-

MENASHE’S CREDIBILITY.

In Masson v. New Yorker Magazine, 501 U.S. 447, 517

(1991), the Court recognized what should have been obvious:

“Meaning is the life of language.” [Oluotations may be a

devastating instrument for conveying false meaning.” “Where

a writer uses a quotation, and where a reasonable reader

would conclude that the quotation purports to be a verbatim

repetition of a statement by the speaker, the quotation marks

indicate that the author is not involved in an interpretation of the

speaker’s ambiguous statement, but attempting to convey what

the speaker said.” 501 U.S. at 519. The point is the attempt to

convey what the speaker said. As every reader of English since

Joyce and Faulkner recognizes, quotation marks are not the only

way of conveying to a reader that words are being attributed to

someone.

Where a defamatory story’s star witness is a liar, and is

advocated as being believable based upon the testimonial of a

“moral hero,” a “sharp renunciation” of the witness by his

“putative champion” is material. Altering and omitting material

“quotations” in such acase, “may be a devastating instrument for

conveying false meaning.”

By ignoring the way in which Esquire changed the meaning

of Richardson’s purportedly filed affidavit, and altered the

meaning of Richardson’s remarks about Ben-Menasbe s

knowledge of October Surprise, the Court of Appeals ignored

Masson. The court fashioned a novel way for publishers to

immunize themselves from liability for attacking public figures

with doubtful charges made by known liars.

IV. THE COURT OF APPEALS’ CONFESSIONAL

SHIELD, AND RULE OF ABSOLUTE SUBJECTIVITY,

CONFLICTS WITH ST. AMANT v. THOMPSON.

In St. Amant v. Thompson, this Court recognized that a

defendant should not be entitled to immunity just because he

testifies that he published defamatory material in good faith. 390

U.S. at 732. The Court of Appeals sidestepped this rule, and

invented a new immunity under which liability will attach only

if a publisher confesses that he did not publish in good faith, ever

where there is objective evidence of fabrication.

Richardson told Unger, and Unger showed Esquire, that

Richardson said Ben-Menashe doesn't help much with the

October Surprise story to verify the truth.” Editor Warren

“browsed in precisely those notes.” But because Warren did not

confess to “what he made of” the notes, the evidence of

fabrication “cannot much help McFarlane.” Opinion at 18. The

Court of Appeal's confessional shield is the most radical of its

extensions of the New York Times v. Sullivan doctrine: it would

provide absolute immunity for all defamation, except to the

mythic publisher willing to confess to a conscious awareness of

falsehood — a creature not to be imagined even in any of Plato's

caves.

V. THE COURT OF APPEALS’ WEIGHING OF THE

EVIDENCE CONFLICTS WITHANDERSON »v. LIBERTY

LOBBY. ;

Anderson vy. Liberty Lobby, 477 U.S. 242, 255 (1986),

reaffirmed that the rules governing s immary judgment apply to

public figure libel cases:

Credibility determinations, the weighing of

the evidence, and the drawing of legitimate

inferences from the facts are jury functions,

not those of a judge, whether he is ruling ona

motion for summary judgment or for a

directed verdict. The evidence of the non-

movant is to te believed, and all justifiable

inferences are to be drawn in his favor.

The Court of Appeals disregarded Anderson, and engaged in

wholesale weighing of evidence and credibility. In every

instance where a reasonable juror could draw an inference of

actual malice (even where the Court of Appeals specifically

recognized that such an inference could reasonably be drawn),

confess to a subjective awareness of the obvious

falsehood in front of him.

The Circuit weighed as “ambiguous” and no

evidence of actual malice the manufacture of a

quotation conveying that Ben-Menashe should

be trusted about October Surprise from a

statement that Ben-Menashe knows alot, quite

apart from what he says about October Surprise.

Esquire’s explanation for suppressing

Richards onꝰs statement, “I can’t tell if the son of

the court weighed the evidence in Esquire’s favor.

Although Esquire’s argument that there is “no

material difference” between the “recruited by”

and “special relationship” phrases is rejected as

“fanciful,” the Court of Appeals found no actual

malice in the fabrication.

The Court of Appeals acknowledged that

Esquire’s editors knew the article could convey

that the affidavit Richardson purportedly filed

accused McFarlane of being Mr. X in the

Pollard spy case. Nevertheless, the Circuit

accepted the “pretty thin” “comma theory”

which it characterized as an “imprimatur

stretch” because it determined it to be “as

consistent with linguistic muddle as with

reckless disregard.”

Although “Esquire saw Unger’s notes, and they

speak for themselves,” the Circuit refused to

find actual malice in the falsification of a

endorsement because Esquire’s editor did not

a bitch is telling the truth” was “maintaining the

integrity of what Mr. Richardson said.” The

Circuit recognized this “to be some sort of

jargon for suppressing material inconsistent

with a broad effort to build up Ben-Menashe’'s

credibility.” Yet, the Circuit gave this

fabrication “only limited weight.”

From any standpoint other than a bias toward absolute

immunity for the libel of public figures, it is difficult to imagine

a reasonable juror agreeing with the Court of Appeal’s

assessment of the evidence.

VI. CERTIORARI SHOULD BE GRANTED TO

CLARIFY THE EXTENT TO WHICH A PRINCIPALCAN

BE LIABLE FOR THEACTUALMALICE OF ITSAGENT

IN APUBLIC FIGURE LIBEL CASE.

Cantrell v. Forest City Publishing Co.,419U.S.245 (1974)

held that a publisher with no actual knowledge of any

inaccuracies in an article could nevertheless be found

vicariously liable for the actual malice of a feature writer.

Although the writer was a staff writer for anewspaper owned by

the publisher, the false article (which placed the plaintiffs in a

“false light”) was published in a magazine the publisher also

owned, and to which the writer did not regularly contribute. This

Court concluded:

Eszterhas frequently suggested stories he

would like to write for the magazine. When

Eszterhas suggested the follow-up article on

the Silver Bridge disaster, the editor

approved the idea and told Eszterhas the

magazine would publish the feature if it was

good. From this evidence, the jury could

reasonably conclude that Forest City

Publishing Co., publisher of the Plain Dealer,

should be held vicariously liable for the

damage caused by the knowing falsehoods

contained in the Eszterhas’ story.

. The circuits and district courts are confused and in

disagreement about the scope of agency liability under the actual

malice standard. Gertz v. Robert Welsh, 680 F.2d 527, 539, n. 19

(7th Cir. 1982) held that agency liability could exist where a

writer was “solicited to write this specific article, was given the

story line and background material, was reimbursed for his

expenses, and kept in contact with [the editor] during the

preparation of the article.” Price v. Viking Penguin, Inc., 881

F.3d 1426, 1446 (8th Cir. 1989) refused to find actual malice

under an agency theory where “Viking played only a limited role

in the story 's development” and “undertook no factual review.”

Masson v. New Yorker Magazine, 832 F.Supp. 1350, 1373(N.D.

Cal. 1993) viewed New York Times v. Sullivan as prohibiting

liability based upon an agency theory. The Court of Appeals in

this case admitted to confusion, but ultimately held that actual

= ² R Opinion at

Cantrell does not prevent agency principles from

establishing liability under the actual malice standard. There is

as much reason for holding Esquire liable for Unger’s conduct as

for holding Forest City Publishing liable for Eszterhas. Esquire

knew that Unger represented to McFarlane, “I am areporter who

has been assigned by Esquire Magazine to cover the so-called

‘October Surprise.’ Originally. Unger was going to write about

Donald Gregg, until Esquire changed the assignment. Esquire

not only edited the article, but shaped it, drafting much of the

language which advocated the believability of the accusations.

VII. CERTIORARI SHOULD BE GRANTED TO RE-

EXAMINE NEW YORK TIMES v. SULLIVAN.

The Court of Appeals interpreted the actual malice standard

as protecting publication of defamatory falsehoods against a

public figure by a notorious liar. The court protected the

advocacy of the liar’s accusations through a fabricated

endorsement of a moral champion. Society can no longer afford

the eccentric interpretation of the law which led to such an

outrage.

New York Times v. Sullivan, 376 U.S. 254 (1964) invented

the actual malice standard as a way of protecting freedom of the

press under the First Amendment. The Court believed that false

statements about public figures should be protected unless made

with actual malice, because economic punishment for falsehood

might threaten an informed citizenry, essential to .our

democracy. The untested assumption was that the press would

stop criticizing public officials if it was forced to pay the

economic cost of carelessness. A rule which has the effect of

immunizing falsehood can be seen as designed to redistribute

wealth at the behest of one powerful interest group (the press) at

the expense of others. See George J. Stigler, The Citizen and the

State: Essays on Regulation (1975); Gary S. Becker, “Pressure

Groups and Political Behavior,” in Capitalism and Democracy:

Schumpter Revisited 120 (Coe and Wilbur eds. 1985); Joseph P.

Kalt and Mark A. Zupan, “Capture and Ideology in the Economic

Theory of Politics,” 74 American Economic Review 279 (1984);

Richard A. Posner, Sex and Democracy 215 (1992).

The marketplace has a way of working its magic. Where

economic incentives regulating behavior are removed, market

forces will nevertheless find ways to direct behavior. The press

has paid the cost of carelessness by a steady devaluing the press

since the New York Times decision. James Fallows’ recent

Breaking the News, How the Media Undermine American

Democracy (New York, 1996), pp. 1 and 7, observes that each

year in the past decades, fewer Americans read newspapers or

watch news programs on TV. Fallows blames this primarily upon

the press’s unrelenting negativity concerning public officials.

Freedom of the press is illusory if Americans stop believing

the press. Rather than being acornerstone of democracy, alying

press — or a press perceived as being untruthful — is a

foundation of an antidemocratic state: Pravda in the former

Soviet Union; the Nazis’ use of defamatory falsehoods to

discredit political opponents. Reisman, Democracy and

Defamation: Fair Game and Fair Comment I, 42 Col. L. Rev.

1085 (1942) (arguing that libel law is central to democratic

survival). See Justice White's dissent in Gertz v. Robert Welsh,

418 U.S. 323, 400 (1974).

Freedom of the press is like a kite, which needs both

discipline and space in the use of the string. Libel laws are the

press’ string. Cutting the string does not increase the kite’s

freedom; it causes it to crash. The actual malice standard —

certainly as interpreted by the Court of Appeals here — cuts the

string of truth. Freedom crashes.

5. Those of us who have been adults since 1964 have seen a steady

decline in the number of newspapers since the Times decision. Just this

weekend, Hearst announced that it could no longer continue to operate the

afternoon San Francisco Examiner.

What would be the harm to freedom, and to freedom of the

press, if the standard for liability in a public figure defamation

case was less strict than “actual malice”? What would be the

harm to freedom if the American public actually believed the

press, because the public had some confidence that defamatory,

harsh and critical statements about public figures were true, and

not protected inventions and buttressed rantings of

acknowledged liars? Does anyone imagine that if Ford Motor is

kept to a standard of care which includes liability for

carelessness, it will stop making cars? Of course not. Ford's

recent recall of a record 8.7 million vehicles, though

economically costly, will have the economic benefit of having

consumers trust in the reliability of Ford cars. Does anyone

believe that if the press is held to a standard of truthfulness that

it will stop publishing about public figures? Of course not — as

can be seen in the press of Britain and our other democratic

cousins. Any economic cost will have the corresponding

economic and political benefit of having the American people

trust in the reliability of what they read.

VIII. THE SEPARATION OF THEACT OF LIBEL FROM

ITS INJURY CONFLICTS WITH BOTH KEETON ¥.

HUSTLER MAGAZINE AND CALDER v. JONES.

D.C. Code § 13-423(a)(3), provides jurisdiction over a

person causing tortious injury in the District of Columbia by an

act or omission in the District of Columbia. In Moncrief v.

Lexington Herald-Leader Co., 807 F.2d 217, 221 (D.C. Cir.

1986), the D.C. Circuit pronounced a rule of District of

Columbia law not based upon any District case, or any other

authority, making a metaphysical separation between the “act”

of libel and the “injury” libel causes. Under this notion, a

defamatory act could occur although no one read or heard the

defamation. Moncrief distinguished Keeton v. Hustler, 465 U.S.

770 (1984) on the ground that the New Hampshire statute

conferred jurisdiction if a defendant “commits a tort in whole or

in part in New Hampshire.” |

Moncrief is inconsistent with Keeton and with common

sense. The “tort of libel is generally held to occur wherever the

offending material is circulated.” 465 U.S. at776. Atort may not

occur without an act. The District of Columbia statute does not

say “the act,” but rather “an act.” Therefore, an act of libel

occurs wherever the offending material is circulated. “[T]here

can be no defamation without publication.” Crane v. New York

Zoological Society, 894 F.2d 454, 457 (D.C. Cir. 1990). Awee

falling in the forest with no one near to hear may or may not make

: = an unpublished defamation, however, is not an act of

ibel.

Moncrief appears to have crafted special procedural

protections to defendants in libel and defamation actions in

addition to constitutional protections embodied in the

substantive laws. This conflicts with Calder v. Jones, 465 U.S.

783, 790-791 (1984). The Court of Appeals in this case was

bound to follow Moncrief, whether or not it thought it desirable.

Only this Court can clarify whether the metaphysical parsing of

—. and injury in libel cases should continue to govern the

istrict.

CONCLUSION

The Court of Appeals fashioned a series of immunities for

the publication of a known liar’s falsehoods: the

acknowledgement shield; the trusted reporter shield; the

confessional shield. The Circuit fashioned the neutral reportage

doctrine into a form of constitutional protection, then ignored

that the doctrine does not apply to advocacy pieces. The Circuit

acknowledged that Esquire’s advocacy was fashioned upon a

fabricated endorsement, but found that such fabrication did not

constitute actual malice. Finding penumbra emanating from the

actual malice standard, the Circuit fashioned special rules

insulating defendants in public figure defamation cases from

general rules of agency and general logic, imagining that the act

of defamation can occur without anyone hearing or reading the

defamatory statement. The Court of Appeal’s decision was in

direct conflict with this Court’s teachings in St. Amant, Masson,

and Anderson.

But the problem may be with the actual malice standard

itself. In New York Times v. Sullivan, this Court calculated that

the economic cost of subjecting the media to damage verdicts for

publishing falsehoods was less than the economic cost if the

media failed to publish the truth. There was no evidence that

damage awards would prevent publication of harsh truths. This

calculus was made at a time of racial turmoil; the decision

revealed a profound mistrust that juries could deal with issues of

desegregation, and a lack of confidence that judges could

properly review damage awards. The actual malice standard is

now perceived as being so “daunting” that it protects publication

of vicious cinematic fiction invented by a notorious liar.

This Court invented the actual malice standard — it is

neither in the Constitution nor in the common law of libel which

existed at the time the First Amendment was framed. The

invention filled a perceived need to protect the press in atime of

radical change in the country’s race relations. This Court can

withdraw or restrict the invention, in order to fill an obvious need

for a press that is perceived as filling democracy’s thirst for truth.

The invention of the actual malice standard was

unnecessary for democracy until 1964. A “free” and

undisciplined press which no one believes (or from the evidence

in this case, should believe) is antithetical to democracy. The

actual malice standard of New York Times v. Sullivan should be

re-examined. At the least, certiorari should be granted to

conform the standard’s interpretation to the decisions of this

Court which have not protected deliberate falsehoods, however

artfully crafted.

Respectfully submitted,

FORRESTA. HAINLINE III

Counsel of Record

Attorney for Petitioner

1100 Connecticut Avenue, N.W.

Suite 1200

Washington, D.C. 20036

(202) 466-2370

APPENDIX A — COURT OF APPEALS OPINION

DATED JANUARY 30, 1996

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 6, 1995 Decided January 30, 1996

No. 94-7137

Rosert C. McFar ane.

APPELLANT

Esquire MAGAZINE, Er XL.

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 92cev00711)

Forrest A. Hainline, III argued the cause and filed the

briefs for appellant.

Bruce W. Sanford argued the cause for appellees. With

him on the brief were Lee T. Ellis, Jr, Henry S. Hoberman

and Robert D. Lystad.

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

Aprendix A

Before: WILLIAus, GinsBurG and RANDO, n, Circuit Judges.

Opinion for the Court filed by Circuit Judge Wi vias.

Wituias, Circuit Judge: In the late '80s and early 908

articles appeared in the American press asserting an “Octo-

ber Surprise”—a scheme by members of the 1980 Reagan-

Bush campaign team to thwart President Carter's efforts to

negotiate the release of Iran’s American hostages by inducing

the Iranians to delay their agreement. Ultimately (in Janu-

ary 1993) a bipartisan task force of the House of Representa-

tives emphatically rejected these claims. See Joint Report of

the Task Force to Investigate Certain Allegations Concerning

the Holding of American Hostages by Iran in 1980, H. Rep.

No. 102-1102 (102d Cong., 2d Sess.) (“Task Force Report”).

In the meantime, however, defendant Craig Unger wrote and

defendants Esquire Magazine and Hearst Corporation (collec-

tively “Esquire”) published an article sketching out the con-

spiracy theory in lurid terms. The magazine’s October 1991

cover asked, “Did the Republicans conspire with Iran and

Israel to delay the release of the hostages and steal the 1980

presidential election?” The article’s answer appeared to be a

qualified Yes.

In a breathless and kaleidoscopic account rivaling an Oliver

Stone movie, Unger writes that plaintiff Robert McFarlane,

while an aide to Senator Tower, attended a February 1980

meeting with Iranian officials in Teheran—a meeting that

“helped set up later meetings in Madrid, which in turn paved

the way for the crucial October rendezvous in Paris.” (In the

“October rendezvous” George Bush and William J. Casey are

supposed to have closed the deal by which Iranians stalled

hostage negotiations in exchange for promises of arms. But

see Task Force Report at 173 (finding that the records and

testimony “conclusively prove candidate George Bush’s

whereabouts in October 1980,” and that he did not travel to

Paris in the period alleged).) It is not said just how the

Appendix A

February meeting “helped set up” later meetings (or how

those “paved the way” for the supposed climax in Paris), but

in the course of the account the defendants used language

effectively calling McFarlane an Israeli spy. McFarlane fo-

cuses on this passage, which quotes from Ari Ben—Menashe, a

self-professed former Israeli spy and a major source for

conspiracy theorists:

In February 1980, Ben-Menashe says, Robert “Bud”

McFarlane, then an aide to Senator John Tower, and

Ear! Brian, a businessman who had been secretary of

health in Reagan’s California cabinet, met highly placed

Iranian officials in Teheran. In a sworn affidavit submit-

ted by Elliott [sic] Richardson on behalf of one of his

clients, a computer-software company called Inslaw,

Ben-Menashe states that both McFarlane and Brian had

a “special relationship” with Israeli intelligence, McFar-

lane having been recruited by Rafi Eitan, a legendary

Israeli agent who was the model for a leading character

in John LeCarre’s Little Drummer Girl. “McFarlane

was the famous Mr. X in the Pollard case,” adds Ben-

Menashe, referring to the trial of Jonathan Pollard, an

American convicted of spying for Israel. In Pollard’s

case there were persistent allegations about another,

unnamed American who secretly worked for the Israelis.

Both McFarlane and Brian have declined comment.

McFarlane and Brian’s visit, Ben-Menashe says,

helped set up later meetings in Madrid, which in turn

paved the way for the crucial October rendezvous in

Paris.

(Emphasis added, except for Little Drummer Girl)

Unger’s article discloses doubts about Ben-Menashe's cred-

ibility, including quotations from intelligence officials and

journalists calling him a “fake” and a “con man.” The article

also says that Ben-Menashe took a lie detector test for a

news organization and “failed miserably,” but then adds that

“it’s almost impossible to dismiss him.”

Appendix A

McFarlane brought suit against both Esquire and Unger in

the U.S. District Court for the District of Columbia, alleging

that the above passage falsely conveyed to Esquire’s readers

that McFarlane was an Israeli spy and a traitor

country. After discovery the district court granted defen-

dants’ motion for summary judgment. It held that it had no

personal jurisdiction over Unger and that no reasonable jury

could have found, by clear and convincing evidence, that

Esquire had published the piece with “actual malice,” le.,

with knowledge that the statements were false or with reck-

less disregard of their probable falsity, which McFarlane, as

an undisputed public figure, would have to prove in order to

win his case. See New York Times Co. v. Sullivan, 376 U.S.

254, 279-80 (1964); Liberty Lobby, Inc. v. Dow Jones & Co.,

Inc., 838 F.2d 1287, 1293 (D.C. Cir. 1988). We affirm.

* „ 0

I. Personal jurisdiction over Unger

McFarlane claims thai the court had personal jurisdiction

over Unger by virtue of subsection (3) or (4) of the District’s

statute relating to personal jurisdiction based on conduct

linked to the District:

(a) A District of Columbia court may exercise personal

jurisdiction over a person, who acts directly or by an

agent, as to a claim for relief arising from the person’s—

(1) transacting any business in the District of Colum-

bia;

(3) causing tortious injury in the District of Columbia

by an act or omission in the District of Columbia;

(4) causing tortious injury in the District of Columbia

by an act or omission outside the District of Columbia

if he II] regularly does or solicits business, [2] engages

in any other persistent course of conduct, or [3] derives

substantial revenue from goods used or consumed, or

services rendered, in the District of Columbia.

Appendix A

D.C. Code 1981 § 13-423(a). Although the D.C. Court of

reads subsection (1) to extend to the “limits of due

see Environmental Research Int'l u Lockwood

plaintiff in the District, and we found no basis for jurisdiction

under subsection (3).

McFarlane argues that in a libel action the injury is part of

the tort, so that, in law, the defendant has committed an act

within the District. We rejected that claim in Moncrief, on

the ground that to accept it would obliterate subsection (3)’s

careful distinction between “injury” and act.“ Jd at 220-21.

McFarlane appears to concede that circuit precedent excludes

Unger from the purview of § 13-423(a)(3), and invites us to

overrule Moncrief. But we have no power to do so, even if

we thought it desirable. One panel of the court does not have

to overrule another. See, e.g., United States v.

Caldwell, 543 F.2d 1333, 1369 n.19 (D.C. Cir. 1974).

Section 13-423(a)(4) is of no more help to McFarlane. It

contemplates jurisdiction when there is tortious injury within

the District accompanied by any of three specified kinds of

additional contacts between the District and the defendant,

not necessarily related to the contested act or injury. Crane

v. Carr, 814 F.2d 758, 763 (D.C. Cir. 1987). McFarlane has

Appendix A

not shown that Unger had any of the specified types of

contacts. His appeal makes no claim at all on the third

(regular business or persistent course

tions (the Washington Post and the New Republic). But

writing an article for a publication that is circulated through-

conduct, within the District. The writer is not the publisher;

Unger’s contacts must be assessed separately. See Keeton v.

Hustler Magazine, 465 U.S. 770, 781 n.13 (1984).

Thus we are left with two articles appearing in Washing-

ton-based publications, one in the Washingion Post (which

was written after McFarlane’s complaint was filed and is

therefore no basis for personal jurisdiction, see Klinghoffer v.

S.N.C. Achille Lauro, 937 F.2d 44, 52 (2d Cir. 1991); Asarco,

Inc. v Glenara, Ltd., 912 F.2d 784, 787 n.1 (6th Cir. 1990))

and one in the New Republic. If “regularly” and “persistent”

are to have any meaning, sale of two articles to District-based

publications over a career in journalism cannot amount to

“regularly” doing business or to a “persistent” course of

conduct. Thus, without regard to the circuit’s “newsgather-

ing exception” to jurisdiction, see Moncrief, 807 F.2d at 222-

25, we agree with the district court that McFarlane has failed

to show contacts between Unger and the District satisfying

§ 13-423(a)(4). We affirm its finding of a lack of personal

jurisdiction over Unger.

We e'so affirm the district court’s decision to dismiss

instead of transfer the case against Unger. The plaintiff

asked for a transfer under 28 U.S.C. § 1406(a), which permits

transfer “in the interest of justice” of a “case laying venue in

transfer should be analyzed under § 1406(a) or instead under

28 U.S.C. § 1404(a). See generally 15 Charles A. Wright et

al., Federal Practice and Procedure § 3827, at 263-67 (1986).

In this particular case it appears to make no difference. Our

standard of review is the same—abuse of discretion—under

both sections. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257

(1981) (adopting abuse of discretion standard, noting need to

balance multiple factors, in transfer under § 1404(a)); Naar-

tex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir.

1983) (applying abuse of discretion, without discussion, in

transfer under § 1406(a)). And, although § 1404(a) calls on

the court to consider “the convenience of parties and wit-

Times Co. v. Sullivan, 376 U.S. at 279-80. See also Harte-

Hanks Communications, Inc. v. Connaughton, 491 U.S. 657,

692 (1989) (actual malice shown if there is a

avoidance of the truth”); Tavoulareas u Piro, 817 F.2d 762,

775-76 (D.C. Cir. 1987) (citing cases). We first consider

whether Unger’s state of mind may be attributed to Esquire

for these purposes, and then, having concluded that it may

not, examine the evidence as to the state of mind of Esquire’s

employees.

A. Attribution of Unger’s state of mind to Esquire

Cantrell v. Forest City Publishing Co, 419 U.S. 245, 253-54

(1974). As McFarlane effectively acknowledges, however,

Unger was working as an independent contractor, not as an

employee. McFarlane notes thet Unger did use the prestige

of Esquire by representing himself to interviewees as work-

Appendix A

ing for Esquire, so we assume that Esquire may have estab-

lished some sort of agency relationship with Unger. Thus we

). See, e. g., Price v.

Viking Penguin, Inc., 881 F.2d 1426, 1446 (8th Cir. 1989);

Secord u Cockburn, 747 F. Supp. 779, 787 (D. D. C. 1990). But

Cantrell doesn’t say that. The writer in question was an

employee of the corporate defendant, and, although the trial

court had given an instruction somewhat muddling the cate-

gories of employee and agent, no one had objected. Cantrell,

419 U.S. at 253-54 & n.6. So Cantrell presented no occasion

for the Court to address the issue of when the mental state of

non-employee agents may be imputed to the principal. See

also Masson v. New Yorker Magazine, Inc., 832 F. Supp.

1350, 1871 (N.D. Cal. 1993) (discussing Cantrell).

McFarlane invokes Gertz u Robert Welck, Inc., 680 F.2d

527, 539 n.19 (7th Cir. 1982), but in that case the Supreme

Court had already determined that the plaintiff there was not

10a

Appendix A

a public figure, so that states were free to impose liability on

whatever ground they chose, “so long as they do not impose

Gertz v. Robert Welch, Inc., 418 U.S.

ty for the proposition that vicarious liability can be the

for finding actual malice under New York Times, apart from

respondeat superior. In the next section of its opinion, to be

by the other. See Restatement of Agency 2d §§ 140, 14.

The question here is what kind of control (if any) might

suffice to tie Esquire to Unger’s knowledge for these pur-

lla

Appendix A

grounds of its control over the agent’s activities. Cf. Restate-

ment of Agency 2d § 254 (discussing imputation of agent's

defamation to principal, without reference to malice). But

Although Hunt and Price seem to require an employment

relationship, they might also be understood as supposing that

some kinds of intense editorial involvement by a publisher's

employees might entangle them in the independent writer’s

thought process enough to serve as a basis for holding the

publisher vicariously liable. But why should editorial controls

that take the employee editors themselves to a point short of

actual malice be deemed to establish the publisher’s actual

12a

Appendix A

malice? One answer might be that not to do so creates a

perfect escape hatch for deep-pocket publications. But the

answer is not completely satisfactory, as any writer who

knowingly ventures into legally risky waters, and who is

reluctant to experience personal bankruptcy, would presum-

ably demand an indemnity agreement, putting the publisher

on the line. Further, actual malice is a First Amendment

protection predicated on a subjective state of mind, Hutchin-

son u Proxmire, 443 U.S. 111, 120 n.9 (1979) (citing New

York Times), which surely cuts against any extension of

vicarious liability beyond respondeat superior. Because we

doubt that actual malice can be imputed except under respon-

deat superior, and because in any case McFarlane presents

no evidence showing Esquire’s supervision of the process by

which Unger turned raw data into finished article (as distinct

from control over his final product), cf. Restatement of Agen-

cy 2d § 14 N emt. b, we conclude that McFarlane may show

Esquire’s malice only through evidence of the information

available to, and conduct of, its employees.

B. Evidence that Esquire editors had actual malice

Because both parties in their original briefs made little

effort to distinguish between the possible malice of the two

defendants, we ordered an additional round of briefing direct-

ed to evidence of actual malice on the part of Esquire’s

editors. We assume, in favor of McFarlane, that information

in the mind of each individual Esquire editor may be aggre-

gated with information in the mind of every other editor, but

we do not decide the point. Our review persuades us that

McFarlane failed to submit evidence from which a jury could

find such malice.

McFarlane’s supplemental brief on the issue is obscure. In

a series of paragraphs the brief asserts that “Esquire editors

13a

Appendix A

knew ...” various facts. The facts are largely ones that

appear on computer disks containing Unger’s transcriptions

of his notes of interviews with various sources, which Unger

sent over to Esquire. But with one exception the Esquire

editors questioned on the matter said (und McFarlane offers

no reason why a jury should disbelieve them) that they did

not examine the transcripts; the single exception, research

editor Mark Warren, said that he had spot checked some of

comment. We review these points in turn, recognizing that

McFarlane is entitled to an aggregate consideration of all of

these claims—with the evidence construed most favorably to

him—to see if he has met his burden. Tavoulareas, 817 F.2d

at 794 n.43.

l4a

Appendix A

1. Reasons to doubt the credibility of Ben-Menashe

Ben-Menashe is the source for many of the details in

“October Surprise,” including the ones in the passage under

attack in this case. Several of Unger’s sources made clear to

him their belief that Ben-Menashe was a liar, and Esquire

does not deny its awareness of these views; it couldn’t, as the

article passed a substantial chunk of them through to the

readers. The article directly quotes a former CIA officer and

a Washington Post journalist as calling him, respectively, a

“liar” and a “con man.” It notes that when he took a lie

detector test he “failed miserably,” and it quotes an ABC

News producer as saying that in the lie detector test Ben-

Menashe “goes way off the chart on all relevant questions.

My theory is that a lot of what he says is true, but that Ari

exaggerates his own role and muddies the water.” But full

(or pretty full) publication of the grounds for doubting a

source tends to rebut a claim of malice, not to establish one.

See Tavoulareas, 817 F.2d at 788 n.35.

We are not, of course, saying that one may altogether

shield a defamation simply by including the source’s reputa-

tion as a liar. Here Esquire supplied an answer of sorts to

the question of why, knowing Ben-Menashe's flaws, they still

saw fit to pass his accusations on to its readers. Editor

William Blythe approved addition of the phrase, “Yet it’s

almost imposs‘hle to dismiss him,” directly after the recitation

of Ben-Meaashe's vulnerabilities. Explaining the decision,

he testified. “We wouldn’t have used him as a source unless

we thongut he had some knowledgeability.... We ... knew

that he ... was the [sic; “a”?) source of the Iran-Contra

story, and certainly that had checked out, and also that

Congress was investigating Ari Ben-Menashe's charges and

using him as a witness.” Esquire’s editor-in-chief, in the

course of elaborating on his denial that he “knew that what

Ben--Menashe was saying was as likely to be false as it was to

be true,” also pointed to Ben-Menashe's apparent vindication

15a

Appendix A

indeed show a lack of

malice by a publisher. See Speer v. Ottaway Newspa-

Doubleday & Co., 513 F. Supp. 1383, 1390 Sb. N. v. 1981).

Cf. Washington Post Co. v. Keogh, 365 F.2d 965, 971-72 (D.C.

Tab

McFarlane says that Esquire “reviewed” a report by the

PBS television documentary “Frontline,” showing that an

arms dealer, Houshang Lavi, not Ben—Menashe, attended a

meeting at the L’Enfant Plaza with some Reagan campaign

l6a

Appendix A

foreign policy advisers. (This meeting actually occurred.

See Task Force Report at 109-18.) From the fact that the

final article did not mention the L’Enfant Plaza meeting,

whereas Unger’s original draft did, expressing doubt about

Ben-Menashe’s claim to have been present there, McFarlane

argues that the jury could infer a willful intent to suppress an

instance where Ben-Menashe was proven flat-out false. It is

not clear to us that the pronouncements of an obscure inter-

national arms dealer are so self-evidently true that they could

be said to establish the falsity of Ben-Menashe's claims,

though of course the contradiction is not trivial. (In fact, the

strongest evidence presented to the Task Force on the identi-

ty of the foreign interlocutor, a contemporaneous memo by

participant Richard Allen, identifies him as one A. A. Mo-

hammed, a Malaysian and so far as appears in no way

connected to Ben-Menashe or Lavi. See id. at 115.) More-

over, McFarlane has not directed our attention to any deposi-

tions indicating what real contact Esquire editors may have

had with the Frontline report or with raw data as to the

L’Enfant Plaza meeting generally.

In sum, given Ben-Menashe's supposed ole as a source in

Iran-Contra, Unger’s reputation with Esquire, and the inher-

ent difficulties in verifying or refuting a claim that someone is

the agent of a foreign power, the proofs do not add up to the

possibility of a reasonable jury finding of clear and convincing

evidence of reckless awareness of probable falsity, and in no

way show an actual belief in falsity.

2. Fabrication of the Elliot Richardson endorsement of

Ben-Menashe’s credibility

McFarlane claims that “October Surprise” artificially

boosted Ben-Menashe's credibility, fabricating a “pedigree”

for him with quotations from Elliot Richardson—referred to

in the article as the “moral hero” of Watergate—purporting

to show that Richardson took Ben-Menashe seriously. First,

recall that the disputed passage includes the following sen-

tence:

17a

Appendix A

In a sworn affidavit submitted by Elliott (sic) Richardson

on behalf of one of his clients, a computer-software

company called Inslaw, Ben-Menashe states that both

McFarlane and Brian had a “special relationship” with

Israeli intelligence, McFarlane having been recruited by

Rafi Eitan, a legendary Israeli agent who was the model

for a leading character in John LeCarre’s Little Drum-

mer Girl.

The statement is technically false in one narrow respect—

Richardson evidently did not appear as counsel of record in

the Inslaw case. But he later said (and it is not disputed)

that he was on the legal team for Inslaw, and he evidently so

represented himself to Unger, who was Esquire’s only

claimed source of information about Ben-Menashe's Inslaw

affidavit.

The sentence has a far more serious flaw. Its latter part,

beginning with “McFarlane having been recruited by

Rafi Eitan,” is not in the affidavit. Nor indeed is there

anything in the affidavit remotely supporting the statement

in the article’s following sentences, making McFarlane out

to be an equivalent of Pollard—a spy who had pled guilty

to, in effect, selling masses of top secret U.S. material

to the Israelis. While McFarlane does not dispute that

Ben-Menashe made these assertions to Unger, the text of the

affidavit supports only the idea of a “special relationship.”

Thus, says McFarlane, Esquire stretched the Richardson

imprimatur from the relatively innocent special relationship”

all the way to the charge of espionage.

Esquire offers two answers. First, it now argues that

— 1 — — between the “recruited by”

and “special relationship” phrases. This is fanciful. “Special

relationship” seems infinitely elastic, while “recruited,” in

context, suggests a switch of allegiance to a foreign power.

Second, Esquire’s editors testified that they recognized that

Appendix A

the passage might appear to suggest that the whole accusa-

tion was in the affidavit, but that they ordered changes—their

recollection was the addition of the comma—to indicate the

McFarlane puts more stress on Esquire’s use of a truncat-

ed quote from Richardson in a mention of the Ben-Menashe

And former attorney general Elliott [sic] Richardson

has submitted sworn affidavits by Ben-Menashe on be-

half of a client. A standard legal gambit, perhaps, but

Richardson finds Ari Ben-Menashe a compelling witness.

“I take him seriously as being who he says he is,” says

Richardson. :

Richardson’s actual comment, as reflected in Unger’s earli-

er draft and substantially corroborated in his notes, was,

“Quite apart from what he knows, I take him seriously as

being who

reflect my views of Mr. Ben-Menashe.“ But while the state-

ment may aid Esquire in a defense of truth (on a rather

peripheral matter, not the defamatory material itself), it does

19a

Appendix A

not dispose of the question of actual malice, which turns on

Esquire’s subjective beliefs and purposes at the time of

publication. Esquire saw Unger’s notes, and they speak for

themselves.

Nonetheless, we think the explanation by Esquire—that

they deleted the clause because of space considerations and

because of its ambiguity—altugether plausible. “Quite apart

from what he knows” could be taken to mean that Richardson

believed Ben-Menashe's claimed identity but not his state-

ments, er it could mean that Richardson wanted to emphasize

his belief in Ben-Menashe’s identity, not simply Ben-

Menashe’s apparent knowledge. The clause is ambiguous.

And with or without it this Richardson endorsement seems to

add up to very little.

We are more troubled about a different discrepancy be-

tween Unger’s notes and the final article. The notes, quoting

Richardson's statements to Unger about Ben-Menashe, say

(correcting obvious typographical errors): '

[Ohne thing that is true of people like him is that they

live in a world of such constant deception I] that they are

used to moving without misstep between truth and fabri-

cation so he doesn’t help much with the October surprise

story to verify the truth.

As Esquire put most of its eggs in the Ben-Menashe

basket, both for October Surprise generally and for the

The transcript, without corrections, reads as follows:

one thing that is true of people like him is that they live ina

world of such cosnstatn deception is that they are used to

moveing without missssetp bewtwen truth and fabircation so he

deosnt help much wit hte ocrotber surprise sty toverify the

truthufl

Israel to DELAY the RELEASE of the hostages and steal

the 1980 PRESIDENTIAL election?”) (typography in origi-

displa

sort that deprive Esquire of any “neutral reporting” privilege,

In re UPI, 16 Media L. Rep. (BNA) 2401, 2408 (D.D.C. 1989),

but see White v. Fraternal Order of Police, 909 F.2d 512, 514,

528 (D.C. Cir. 1990) (leaving open the scope of the privilege

21a

Appendix A

under District law)), none of the displays relates directly to

McFarlane or goes directly to Esquire’s subjective intent to

tell a mistruth or speak with willful disregard of truth. “The

fact that a commentary is one sided and sets forth categorical

accusations has no tendency to prove that the publisher

believed it to be false.” Westmoreland u CBS, Inc., 601

F. Supp. 66, 68 (S.D.N.Y. 1984).

4. The report of McFarlane’s refusal to comment

In the last stages of editing, Esquire changed the article's

treatment of McFarlane’s response to the charges. “McFar-

lane denied the charges” became “McFarlane ... refused

comment.” Esquire’s David Hirshey testified that they had

been holding space for McFarlane’s response, but were told

by Unger that McFarlane had refused to agree to any kind of

interview. Indeed, McFarlane wrote that he thought he

would be “of little help” to Unger, essentially declining to be

interviewed.

McFarlane notes that Unger’s letter requesting help from

McFarlane was phrased very blandly, saying that he was

about to do an article on the October Surprise and asking for

an interview. There was not a clue as to the depths of the

charges (“By the way, I plan to accuse you of being an Israeli

spy.”). And Mark Warren acknowledged having seen a copy

of the letter to McFarlane, and the latter’s reply, in the

editing process. In a later telephone call, according to

McFarlane’s executive assistant, Unger mentioned October

Surprise and Inslaw, but, again, not a word about espionage.

Thus Warren and Esquire were on some notice of what had

led to McFarlane’s position. In retrospect, this looks at least

very careless, but not enough to entangle Esquire in Unger's

apparent misleading, which would be necessary for Esquire’s

behavior to help show actual malice on its part. “{P)laintiff

must prove more than an extreme departure from profession-

al stan lards.“ Harte-Hanks Communications, Inc. v Con-

naughton, 491 U.S. 657, 665 (1989).

23a

APPENDIX B — MEMORANDUM OPINION

FILED JUNE 8, 1994

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil No. 92-0711 TAF

ROBERT C. McFARLANE,

Plaintiff,

ESQUIRE MAGAZINE, et al.,

Defendants.

MEMORANDUM OPINION

This is a defamation suit arising from an article written by

defendant Craig Unger entitled “October Surprise” and

published by defendant Esquire Magazine in October 1991.

Jurisdiction of the Court is based on diversity of citizenship

under 28 U.S.C. § 1332. Plaintiff Robert McFarlane alleges that

the article conveyed to the public false and defamatory

statements that he was an Israeli spy and a traitor to his country.

Plaintiff's prayer for relief includes compensatory and punitive

damages, in addition to the costs of the suit.

The background of this case is discussed in the Court's

Memorandum Opinion of May 27, 1993, (“Mem. Op.“), in which

the Court denied plaintiff's motion for partial summary

24a

Appendix B

judgment on the issue of truth and plaintiff's request for

sanctions, and need not be repeated in detail here.' Briefly,

though, the Esquire “October Surprise” article raised allegations

that Reagan-Bush campaign operatives had engaged in an “arms

for hostages” deal with representatives of the Ayatollah

Khomeini, a deal which included delaying the release of the

Iranian-held hostages until after the November 1980

presidential election.

The passages in “October Surprise” which plaintiff

contends defame him state:

In February 1980, Ben-Menashe says,

Robert “Bud” McFarlane, then an aide to

Senator John Tower, and Earl Brian, a

businessman who had been secretary of

health in Reagan’s California cabinet, met

highly placed Iranian officials in Teheran. In

a sworn affidavit submitted by Elliot

Richardson on behalf of one of his clients, a

computer-software company called Inslaw,

[Ari] Ben-Menashe states that both

McFarlane and Brian had a “special

relationship” with Israeli intelligence,

McFarlane having been recruited by Rafi

Eitan, a legendary Israeli agent who was the

model for a leading character in John

LeCarre’s Little Drummer Girl. “McFarlane

was the famous Mr. X in the Pollard case,”

1. Ina separate opinion, the Court also granted in part plaintiff’ s motion

to amend the complaint, but denied that part which sought to add a claim for

declaratory relief.

25a

Appendix B

* adds Ben-Menashe, referring to the trial of

Jonathan Pollard, an American convicted of

Spy ing for Israel. In Pollard’s case there were

persistent allegations about another,

unnamed American who secretly worked for

the Israelis.

Both McFarlane and Brian have declined

comment.

McFarlane and Brian’s visit, Ben-

Menashe says, helped set up later meetings in

Madrid, which in turn paved the way for the

crucial October rendezvous in Paris.

“October Surprise” at 95.

Now before the Court is defendant Unger's motion to

dismiss the action against him for lack of personal jurisdiction,

or in the alternative for summary judgment. Argument was heard

on this motion in March 1993. The Court allowed the plaintiff

additional time for discovery regarding personal jurisdiction and

the parties filed supplemental briefs on this issue.

Also before the Court is defendants’ motion for summary

judgment on the grounds that plaintiff cannot meet his burden of

proving that defendants published “October Surprise” with

actual malice. Argument was heard on this motion on April 20,

1994.

This Memorandum Opinion discusses both motions. For the

reasons set forth below, the Court grants Unger's motion to

dismiss. Holding in the alternative, the Court finds that even if it

26a

Appendix B

does have personal jurisdiction over Unger, plaintiff's

complaint should be dismissed because there is no genuine issue

of material fact regarding actual malice. Therefore, the Court

grants defendants’ motion for summary judgment.

Motion to Dismiss

Craig Unger, author of “October Surprise,” in an affidavit

filed with the motion, states that he is a resident of New York,

New York. Unger is not now, nor has he ever been, an employee

of Esquire Magazine or the Hearst Corporation; he is a freelance

journalist, hired by Esquire to write “October Suprise.” He

states that he was paid alump sum for writing the article and was

reimbursed for expenses incurred.

Although Unger lived in the District for nine months from

1975 to 1976, he has not lived in the District since that time. He

did travel to the District on two occasions in June 1991, to

interview certain individuals and to review government

documents for “October Surprise.” Unger states that the

telephone calls and visits to the District were primarily for the

purpose of gathering information for che article. Unger

conducted the vast majority of the more than 150 interviews for

the article by telephone from his residence in New York. Unger

drafted the article in New York. He states that he had no control

over and did not participate in the publication or distribution of

the article.

Unger has had other contacts with the District, but he avers

2. Plaintiff disputes Unger s lack of control because Unger chose to

publish his article in Esquire Magazine.

27a

Appendix B

that they have been for the primary purpose of gathering news for

articles. He estimates that he has travelled into the District eight

times in the last ten years, including the two visits in June 1991

for the “October Surprise” article. He further states that he is not

a member of, or employed by, any organization or business

located in the District. Unger also does not own or possess any

real property in the District, nor does he have a bank account in

the District.

II.

Plaintiff asserts jurisdiction under D.C. Code §§ 13-423(a)

(3) and (4), the long-arm statute, which provides, in pertinent

part, that:

(a) ADistrict of Columbia court may exercise

personal jurisdiction over a person, who acts

directly or by an agent as to a claim for relief

arising from the person’s —

(3) causing tortious injury in the

District of Columbia by an act or

omission in the District of Columbia:

(4) causing tortious injury in the

District of Columbia by an act or

omission outside the District of

Columbia if he regularly does or

solicits business, engages in any other

persistent course of conduct, or

derives substantial revenue from

28a

Appendix B

goods used or consumed, or services

rendered, in the District of Columbia

D.C. Code §§ 13-423(a)(3) - (4). The claim for relief must arise

from “acts enumerated in this section“. Id. at (b). While it is the

plaintiff's burden to demonstrate a sufficient factual basis for the

assertion of long-arm jurisdiction, he need only make a prima

facie showing that jurisdiction is conferred by the statute and

“any pleadings and affidavits should be strongly construed

against the moving party.” Law Offices of Jerris Leonard v.

Mideast Systems, 630 F. Supp. 1311, 1313 (D.D.C. 1986)

(citations omitted); Reuber v. United States, 750 F.2d 1039, 1052

(D.C. Cir. 1984) (without an evidentiary hearing, any disputes

should be resolved in favor of nonmoving party) (citation

omitted). Plaintiff must show that the exercise of jurisdiction

comports both with the constitutional requirements of due

process and the requirements of the D.C. long-arm statute.’

Fogle v. Ramsey Winch Co. Inc., 774 F. Supp. 19, 21 (D.D.C.

1991).

3. As an initial matter, plaintiff contends that Unger has waived all

objections to jurisdiction except for a claim to the newsgathering privilege,

because of his response to an interrogatory. Because plaintiff believes that the

newagathering privilege does not apply to Unger, he did not file a protective

action against him in New York. The statute of limitations for a libel claim in

New York has now run.

Unger’s Answer and response to the interrogaiory, however, stated clearly

that he would be relying on personal jurisdiction and the newsgathering

privilege as a defense. See Fn. 6 infra. Therefore, Unger has not waived any

objections to jurisdiction.

29a

Appendix B

A. Acts or omissions in the District.

For jurisdiction to lie under D.C. Code § 13-423(a)(3),

plaintiff must demonstrate that a tortious injury occurred in the

District of Columbia and that this injury was caused by

defendant’s act or omission within the District. Akbar v. New

York Magazine Co., 490 F. Supp. 60, 63 (D.D.C. 1980). This

section is “a precise and intentionally restricted tort section,”

which does not take into consideration contacts other than the

defendant’s act in the District. Moncrief v. Lexington Herald-

Leader Co., 807 F.2d 217, 221 (D.C. Cir. 1986) (citation

omitted).

Plaintiff has satisfied the first step: he has made a prima

facie case that he suffered an injury in the District by the

publication of the article in Esquire magazine, which is a

national magazine. See Crane v. New York Zoological Soc., 894

F.2d 454, 457 (D.C. Cir. 1990) (libel injury felt where person

lives) (citation omitted).

Plaintiff has no such success with the second step, however.

Unger avers that the act of writing took place entirely outside the

District and that he had no involvement in the actual printing or

distribution of the article. Therefore, Unger committed no acts

within the District. See Moncrief, 807 F. ad at 220 (no jurisdiction

where the act, printing and mailing of the newspaper, occurred

outside of District); Margolis v. Johns, 483 F.2d 1212, 1218

(D.C. Cir. 1972) (where defamatory statements were uttered in

Wisconsin, the “act” occurred outside the District).

Plaintiff urges the Court to ignore the precedent set by

Moncrief and Margolis because they misconstrue the language

of the long-arm statute by focusing on “the act” instead of “an

30a

Appendix B

act” as specified in the D.C. statute. Plaintiff maintains that by

writing “October Surprise” and by delivering it to a national

magazine which published the piece nationally, Unger

participated in “an act” of publishing that article in the District.

Therefore, plaintiff argues, because a tort cannot occur without

an act, and the “tort of libel is generally held to occur wherever

the offending material is circulated,” Keeton v. Hustler

Magazine, 465 U.S. 770, 777 (1984), Unger committed an act in

the District and jurisdiction should lie under this section.

Plaintiff’s argument is unavailing.* While characterizing

Moncrief and Margolis as performing “metaphysical surgery”

on the statute, plaintiff misses the point. The Moncrief Court

distinguished Keeton, noting that the long-arm statute at issue

there did not distinguish between the “act” and the “injury,”

unlike the District statute which does. Moncrief, 807 F. ad at 221;

see also Reuber, 750 F.2d at 1049-50 (because of the statutory

requirements, “it would be playing word games with the statute

to say the ‘act’ occurs wherever the ‘injury’ it causes takes

place.”). Unger committed no act within the District; therefore

jurisdiction does not lie under D.C. Code § 13-423(a)(3).

B. Act outside/injury inside District.

To acquire jurisdiction under § 13-423(a)(4), the plaintiff

must meet three requirements: (I) a tortious injury must occur in

the District of Columbia; (2) the injury must be caused by

defendant’s act or omission outside the District; and (3) the

defendant must satisfy one of the “minimum contacts” with the

District enumerated in paragraph (a)(4). Akbar, 490 F. Supp. at

4. Indeed, plaintiff recognizes as much as he states that the “Court would

be bound to follow Moncrieff plaintiff relied only upon § 13-423 and if Esquire

were not a national magazine.”

3la

Appendix B

63. As discussed above, plaintiff can show an injury in the

District. While Unger disputes whether any injury was caused by

his act or omission outside the District, he does admit that he

wrote the article. Construing the pleadings against Unger, the

moving party, plaintiff has made a prima facie showing that he

was injured by the article. Thus, plaintiff has satisfied the first

two steps of (a)(4).

Because the harm-generating act occurs outside the

District, the statute requires some other reasonable connection

with the District before jurisdiction can be asserted. Crane v.

Carr, 814 F.2d 758, 763 (D.C. Cir. 1987) (the “something more”

or “plus factor” serves to filter out cases in which the impact is

“an isolated event and the defendant otherwise has no, or scant,

affiliations with the forum.”) (citations omitted). Plaintiff must

show that Unger either: (1) regularly did or solicited business in

the District; (2) engaged in any other persistent course of conduct

in the District; or (3) derived substantial revenue from goods

used or consumed, or services rendered in the District. D.C.

Code § 13-423(a)(4). These other connections may be unrelated

to the claim in suit. Crane, 814 F.2d at 763.

1. Regularly doing or soliciting business or engaging

in any persistent course of conduct.

The minimum contacts that are required for regularly doing

business or engaging in a persistent course of conduct should “at

least be continuing incharacter.” Security Bank v. Tauber, 347 F.

Supp. 511,515 (D.D.C. 1972); accord Parsons v. Mains, 580

A.2d 1329, 1330 (D.C. 1990). In addition, the mere act of

newsgathering in the District “is not to be considered as doing or

soliciting business or engaging in a persistent course of conduct

as those terms are used in § (a)(4).” Akbar, 490 F. Supp. at 64

32a

Appendix B

(citations omitted); see also Neely v. Philadelphia Inquirer. Co.,

62 F.2d 873, 875 (D.C. App. 1932) (setting forth newsgathering

privilege).

Unger argues that his contacts with the District, telephone

calls and visits, have been infrequent and sporadic, for the

primary purpose of gathering news. Unger avers that he does not

own or possess any real property, have a bank account, or engage

in any business related activity in the District. Thus, Unger

contends, because his contacts with the District have been for the

purpose of gathering news, the “newsgathering privilege”

embodied in § 13-423(a)(4) bars the exercise of personal

jurisdiction over him.

Plaintiff cannot demonstrate that Unger’s contacts with the

District were for any reason other than gathering news. Failing

that, plaintiff argues, however, that the newsgathering privilege

does not apply to national publications or to their writers, but

only to local publications whose immediate circulation does not

include the District. Because Esquire Magazine is circulated

within the District, the newsgathering privilege does not apply

to it, plaintiff maintains, relying on Founding Church of

Scientology v. Verlag, 536 F.2d 429, 434 (D.C. Cir. 1976).

Therefore, because Unger chose to write for Esquire, plaintiff

contends that the newsgathering privilege does not apply to

Unger either.

Plaintiff's argument fails for two reasons. First of all,

plaintiff assumes that the Court has personal jurisdiction over

Unger because it has personal jurisdiction over Esquire.

Esquire’s contacts with the District are irrelevant; each

defendant’s contacts with the forum state must be assessed

individually. Keeton v. Hustler Magazine. Inc., 465 U.S. 770,

781 n.13 (1984) (citation omitted).

33a

Appendix B

Second, plaintiff's reliance on Verlag is misplaced and he

confuses the minimum contacts prongs of section (a)(4).

Although the Verlag Court noted that the newsgathering

privilege does not bar suits against publishers whose immediate

circulation includes the District, the Court was referring to

publishers whose news dissemination results in substantial

revenue from the District, a separate prong of section 13-

423(a)(4). Moncrief, 807 F.2d at 224-25 (explaining holding in

Verlag). It is clearly established that merely gathering news is not

to be considered as doing or soliciting business or engaging ina

persistent course of conduct. Akbar, 490 F. Supp. at 64. This

privilege applies whether the publication is national in

distribution or not. See Moncrief, 807 F.2d at 219, 221 (privilege

applied even where newspaper circulated in District; plaintiff

did not allege jurisdiction under substantial revenue prong);

Layne v. Tribune Co.,71 F.2d 223 (D.C. Cir.) (privilege applied

even to newspaper that was “circulated extensively throughout

the country.). cert. denied, 293 U.S. 572 (1934); Akbar, 490 F.

Supp. at 64 (privilege applied to magazine with subscription and

newsstand sales in the District; instead, jurisdiction found under

substantial revenue prong). |

Because the newsgathering privilege applies to Unger's

activities in the District, plaintiff cannot establish personal

jurisdiction under the doing or soliciting business or engaging in

a persistent course of conduct prongs of section 13-423(a)(4).°

5. Plaintiff did not allege jurisdiction under D.C. Code g 13-423(a)(1),

transacting business, in his coniplaint. He claims now, however, that Unger s

affidavit shows that Unger has transacted business in the district sufficient for

jurisdiction to lie under section (a)(1). Although this section of the long-arm

statute has been interpreted to reach as far as the due process clause allows, a

claim for relief must arise from acts related to the suit. See Koteen v. Bermuda

Cablevision, Lid.,913 F.24973, 974-75 (D.C. Cir. 1990) (per curiam).

(Cont'd)

34a

Appendix B

2. Substantial revenue.

The question remains whether Unger derived substantial

revenue from activities in the District. “Substantial revenue”

means “enough revenue to indicate a commercial impact in the

forum, such that a defendant fairly could have expected to be

hauled into court there.” Delahanty v. Hinckley, 686 F. Supp.

920, 925 (D. D.C. 1986), aff'd, 900 F.2d 368 (D.C. Cir. 1990).

The focus of the inquiry is on the “quality, quantity and nature of

the contacts,” in determining whether jurisdiction is authorized.

Id. (emphasis in original, citation omitted).

Unger avers that he received a predetermined contractual

fee for his article; his compensation was not tied to the sales of

Esquire in the District or elsewhere. Therefore, Unger argues, he

derived no revenue from activities in the District, citing Young v.

Mallet, 371 N.Y.S.2d 1,3 (N.Y. App. Div. 1975) (royalty income

is not traceable to sales in New York but rather to the contract

which was executed by the author in California).

Plaintiff argues that a portion of Unger’s fee can be fairly

apportioned to the District, even if his contract did not do so.

Because Esquire receives revenues from the District, so does

Unger, plaintiff insists. In addition, Unger frequently writes

articles for national publications which distribute in the District,

including The New Republic, Vanity Fair and People Magazine.

(Cont'd)

Unger 's connections with the District do not fit within section (a)(1) as

they were for the purpose of gathering news. As discussed supra, the mere

gathering of news is not to be considered as doing or soliciting business under

section (a)(4). This analysis would also seem to apply to section (a)(1).

Therefore, that Unger gathered news in the District does not translate into

transacting business in the District. Plaintiff cannot establish personal

jurisdiction under section (a)(1).

35a

Appendix B

Plaintiff again confuses Esquire’s contacts with the District

with Unger's contacts. As discussed above, each defendant's

contacts must be assessed individually. Plaintiff has provided no

evidence to rebut Unger’s statement that he received a lump sum

for his article, unrelated to the sales of Esquire in the District or

elsewhere. Nor has he presented any evidence of revenue

received by Unger for articles written for other publications

distributed in the District.

Plaintiff also argues that, given that Unger knew his story

would be published in the District®, he should have “reasonably

anticipated being haled into court” in the District, citing Calder

v. Jones, 465 U.S. 783, 789-90 (1984) (personal jurisdiction over

author where author knew that his article would have a

“potentially devastating impact” upon the plaintiff, specifically

where the plaintiff lived). In other cases, courts have found

personal jurisdiction when it was reasonably foreseeable that the

defendants’ product would come into the District, even when the

defendants themselves did not send their products into the

District, and the defendants derived substantial revenue from

these products. See Delahanty, 686 F. Supp. at 926 (personal

jurisdiction over gun manufacturer although guns entered the

District illegally; manufacturer had purposefully availed

himself of the District market by national advertising); Fogle,

774 F. Supp. at 24 (winch manufacturer did not have a distributor

in the District; however, the court found personal jurisdiction

because the manufacturer received revenue from winches used

in the District). As in these cases, plaintiff contends, Unger

6. Plaintiff notes that Unger published an article in The Washington Post

in May 1992, regarding the October Surprise story. This May article, plaintiff

maintains, is evidence that Unger knew that the Esquire story would be

circulated in the District.

36a

Appendix B

should be held responsible for publication of “October Surprise”

in the District.

While it may have been reasonably foreseeable that

“October Surprise” would be circulated in the District, without

more, there can be no personal jurisdiction over Unger. Plaintiff

must satisfy both the constitutional requirements of due process

and the statutory requirements of the D.C. long-arm statute. The

District of Columbia cases on which plaintiff relies found that

both requirements had been met. The long-arm statute at issue in

Calder allowed the assertion of jurisdiction whenever permitted

by the California or Federal Constitutions. Calder, 465 U.S. at

786 n.5. Without a showing that Unger derived substantial

revenue from goods used or consumed or services rendered in the

District, plaintiff cannot establish personal jurisdiction under

section (a)(4).

C. Due Process

Because plaintiff has not demonstrated that this Court has

personal jurisdiction over Unger under the D.C. long-arm

statute, the Court will not reach the issue of whether the exercise

of personal jurisdiction would comport with the requirements of

due process.

III.

Plaintiff requests a transfer of the case under 28 U.S.C.

§ 1406(a) if the Court finds that it does not have personal

jurisdiction over Unger. Acourt may transfer a case to another

district even though it lacks personal jurisdiction over the

defendants. Naartex Consulting Corp. v. Matt. 722 F. 2d 779, 789

(D.C. Cir. 1983) (citation omitted), cert. denied. 467 U.S. 1210

37a

Appendix B

(1984). Under 28 U.S.C. § 1406(a), plaintiff must show that

transfer is in the “interest of justice,” although the decision

whether to transfer or to dismiss the case is within the Court's

discretion. Id. at 789 (citations omitted).

Plaintiff maintains that Unger misled him in his

interrogatory responses causing him not to file an action in New

York. The responses themselves, however, demonstrate that

Unger was relying on lack of personal jurisdiction and the

newsgathering privilege.’ In addition, while plaintiff contends

that Unger waited until the statute of limitations ran in New York

before filing the motion at bar, plaintiff presents no evidence that

Unger’s timing was an effort to sandbag plaintiff.

Because plaintiff's suit is now time-barred in New York,

denying a transfer is a heavy penalty for filing suit in the wrong

district. However, that fact alone is not sufficient to grant

transfer; plaintiff's choice to file in this district and not in New

York seems more of a strategic error than a mistake made “by

7. Specifically, Unger responded to plaintiff s interrogatory requesting

all facts upon which his defense of lack of jurisdiction and venue was based by

stating that the defense

is based on the fact that Craig Unger is not within the

personal jurisdiction of the Court. Unger's Third

Defense is also based on the newsgathering privilege,

which provides that a journalist who merely gathers

news in the District of Columbia is not subject to

personal jurisdiction in the District of Columbia

Since this interrogatory is premature before the

completion of discovery, additional persons and

documents supporting Unger's Third Defense may be

identified at a later time.

38a

Appendix B

reason of the uncertainties of proper venue” or “an erroneous

guess with regard to the existence of some elusive fact” upon

which personal jurisdiction would turn. Goldlawr, Inc. v.

Heiman, 82 S. Ct. 913, 915-16 (1962); see also Cote v. Wadel,

796 F.2d 981, 985 (7th Cir. 1985) (“[e]lementary prudence”

would have indicated that a protective suit was necessary;

“proper penalty for obvious mistakes. . . isa heavy one.”).

In addition, as Unger points out, plaintiff will not be

prejudiced if the case remains in the District of Columbia.

Esquire and Hearst have adequate insurance coverage,

according to Unger. The District is also the nexus of the alleged

injury and activities described in the statements at issue.

Transfer of the case at this stage of the proceedings would not be

in the interests of justice. The Court denies plaintiff's request for

a transfer.

IV.

In summary, for the reasons discussed above, the Court

grants defendani Unger’s motion to dismiss for lack of personal

jurisdiction and denies plaintiff's request for a transfer. An

appropriate Order is filed herewith.

Summary Judgment Motion

Defendants move for summary judgment on the grounds

that plaintiff cannot meet his burden of proving that defendants

published “October Surprise” with actual malice. Defendants

also argue that summary judgment is appropriate under the

neutral reportage doctrine and the fair report privilege.

39a

Appendix B

Initially, the parties disagree about the admissibility of

evidence proffered. Defendants first move to strike plaintiff's

objection to the evidence as not being authorized by either the

Federal Rules of Civil Procedure or the Local Rules. The Court

will treat plaintiff's objection as a motion to strike and therefore

denies defendants’ motion on this ground.

A. Plaintiff's exhibit

Defendants also move to strike plaintiff's exhibit 18, the

Joint Report of the Task Force to Investigate CertainAllegations

Concerning the Holding of American Hostages by Iran in 1980,

H.R. Rep. No. 1102, 102d Cong., 2d Sess. (1993). Previously, the

Court ruled that this exhibit was inadmissible because

defendants had conceded that there were questions about Ben-

Menashe’s credibility; therefore the report was not relevant. See

Mem. Op. at 19. Defendants now argue that the Joint Report is

not evidence of actual malice as it was released in January 1993,

some 15 months after “October Surprise” was published. The

Court agrees and strikes plaintiff's exhibit 18.

B. Defendants’ exhibits

Plaintiff moves to strike a number of defendants’ exhibits.*

8. Plaintiff does not object to defendants’ exhibits 5,7, 9 13, 33, 36, 38,

39,41, 44, and 62. Plaintiff’ s objections to defendants’ exhibit 15, Report of the

Special Counsel: The “October Surprise” Allegations and the Circumstances

Surrounding the Release of the American Hostages Held in Iran, and to exhibit

37, telephone log of Craig Unger, are overruled. Previously, plaintiff did not

object to these exhibits being admissible in opposition to his partial summary

judgment motion. See Mem. Op. at 6 n. 3.

40a

Appendix B

Exhibit 1: Affidavit of Elliot Richardson

Plaintiff objects to Elliot Richardson’s affidavit on the

grounds that it is conclusory and not the best evidence of what he

said to Unger; Unger’s notes are the best evidence of his

conversations with Richardson. Defendants are offering

Richardson's affidavit to show what he told Unger, not to prove

the contents of Unger’s notes. Therefore, the best evidence rule

does not apply. Meyers v. United States, 171 F.2d 800, 812 (D.C.

Cir. 1948) (best evidence rule is limited to cases where the

contents of a writing are to be proved), cert. denied, 336 U.S.912

(1949). Richardson’s affidavit is admissible to show what he told

Unger. See Luster v. Retail Credit Co., 575 F.2d 609, 615 (8th Cir.

1978) (testimony was admitted solely to prove that the words

were said); Mem. Op. at 9 (portions of Unger’s affidavit

regarding statements made to him by Ben-Menashe are not

hearsay).

Exhibit 2: Affidavit of Spencer Oliver

Plaintiff objects to the affidavit of R. Spencer Oliver, former

Chief Counsel to the House Foreign Affairs Committee, on the

grounds that defendants did not provide any information about

him until well after the close of discovery. Plaintiff also objects

to any references to Oliver, including references in Craig

Unger’s affidavit, the videotaped interview between Oliver and

‘Ben-Menashe, and Unger’s notes from interviews with Oliver,

for the same reason. Plaintif*’s objections are overruled because

Ben-Menashe’s affidavit of August 4, 1992, filed in opposition

to plaintiff's partial summary judgment motion, stated that he

had made statements to Spencer Oliver. Plaintiff cannot claim

surprise.

4la

Appendix B

Plaintiff 2iso objects to Oliver’s testimony on the grounds

that it is inadmissible hearsay. Evidence offered not for the truth

but to show that the reporter did not have actual malice is not

hearsay. See Mem. Op. at 7 (explaining Liberty Lobby. Inc. v.

Anderson, 562 F. Supp. 201, 203-04 (D. D. C. 1983), af d in part,

rev d in part on other grounds, 746 F.2d 1563 (D.C. Cir. 1984),

vacated, 477 U.S. 242 (1986)). Plaintiff’s hearsay objections are

overruled.

Exhibit 3: Affidavit of Ari Ben-Menashe

Plaintiff objects to Ben-Menashe’s affidavit on hearsay and

unreliability grounds because the Joint Report (see discussion

supra) found he was not credible. The affidavit is admissible not

for the truth of the matters stated therein but to show what Unger

knew when he wrote the article. The affidavit states what Ben-

Menashe told Unger. As for the Joint Reports conclusions

regarding Ben-Menashe’s unreliability, defendants cannot be

held responsible for conclusions reached about credibility after

the publication of “October Surprise.” See Secord v. Cockburn,

747 F. Supp. 779, 792 (D.D.C. 1990) (post-publication events

have no impact on actual malice determination). Plaintiff's

objections are overruled.

Exhibit 4: Affidavit of Craig Unger

Plaintiff objects to four paragraphs in Craig Unger's

affidavit. In paragraph 4, Unger states that he reviewed hundreds

of public accounts about the October Surprise, Inslaw and other

related issues. “Many of these accounts,” he states, “included

references to” McFarlane. Plaintiff objects that this is vague and

conclusory. However, in paragraph 5, Unger lists various

articles, books and other materials that he reviewed for the

42a

Appendix B

article, some of which did include references to McFarlane. See

e.g., Joel Bleifuss, “Agent McFariane,” Jn These Times, May 29-

June 11,1991.

In paragraph 27, Unger states that no one provided any

information “that contradicted Ben-Menashe’s allegations.”

Plaintiff contends that this is also vague because in order to be

evidence of state of mind, the conversations must be given.

Lack of specificity goes to weight and not to admissibility.

See Borecki v Eastern Int Management Corp., 694 F. Supp. 47,

51 n.5 D. N. J. 1988) (same). Defendants also contend that

silence of would-be critics is not offered to prove the truth but to

prove state - of- mind: therefore, this silence is either admissible

non-hearsay, or within the state-of-mind exception to hearsay.

See 2 John W. Strong, et al., McCormick on Evidence § 250 (4th

Ed. 1992) (silence is not hearsay when not offered as an

assertion). Plaintiff's objections are overruled. The paragraphs

are not vague or conclusory and are evidence of what Unger

knew.

Plaintiff also objects to paragraphs 7 and 26, on the grounds

that they are vague and conclusory. Plaintiff's objections to these

paragraphs are overruled as well. In paragraph 7, Unger states

that he knew or believed that government sources and journalists

were using Ben-Menashe as a source and lists three of these

people. In paragraph 26, Unger states that he believed Ben-

Menashe was knowledgeable because “several sources told me

that they believed he was knowledgeable” and details some of

these sources. Unger’s affidavit is admissible.

43a

Appendix B

Exhibit 6: Videotaped interview of Ben-Menashe

Plaintiff objects to the videotaped interview of Spencer

Oliver and Ben-Menashe on the grounds that it is hearsay and

that it cannot be evidence of state of mind because defendants did

not view it. Defendants maintain that the tape is admissible

because it corroborates Unger’s statements that government

officials used Ben-Menashe as a source; therefore it is not

hearsay. See Jauch v. Corley, 830 F.2d 47, 52 (Sth Cir. 1987)

(videotape admissible to prove that statements were made).

Second, defendants contend, the tape is admissible as a proper

response to plaintiff’s attacks on Ben-Menashe’s credibility,

which opened the door to evidence of prior consistent

statements. See United States v. Lopez, 584 F.2d 1175, 1180 (2d

Cir. 1978) (stating rule). Finally, defendants argue, the videotape

is admissible because it provides “context” and thus, is not

hearsay. See United States. v Castro-Lava, 970 F.2d 976, 981

(Ist Cir. 1992) (testimony is not hearsay if offered for more

limited purpose of providing relevant context or background),

cert. denied sub nom. Sarraff v. United States, 113 S. Ct. 2935

(1993).

Although the videotape interview between Oliver and Ben-

Menashe is perhaps admissible as evidence of prior consistent

statements under Fed.R.Evid. 801(d)(1)(B), the Court will strike

the exhibit as cumulative. Spencer Oliver’s affidavit repeats the

essentials of what transpired in his interview with Ben-Menashe.

Exhibit 34: Ronald Reagan autobiography

Exhibit 35: Iran-Contra Hearings

Plaintiff objects to Ronald Reagan’s autobiography and

William Casey’s Iran-Contra testimony on the grounds that they

44a

Appendix B

are hearsay. Unger apparently did not review either one.

Defendants, however, claim that that is irrelevant; these exhibits

are also admissible for context. The Court previously ruled that

these exhibits were inadmissible because they did not fall within

any hearsay exception. Mem. Op. at 10-12. Because defendants

did not rely on these exhibits, the exhibits are not relevant to

whether defendants acted with actual malice. The Court strikes

these two exhibits.

Exhibit45: Bracy v. Kessler, Civil Action No. 89-3135 (D. D.C.

10/7/92 )

Exhibit 46: In re United Press Int'l. 16 Media L. Rep. (BNA)

2401 D. D.C. 1989); Samborsky v. Hearst Corp., 2 Media L.

Rep. (BNA) 1638 (D. Md. 1977).

Plaintiff objects to the use of unpublished judicial opinions.

Iwo of the cases on which defendants rely, however, were

reported in the Media Law Reporter. Bracy v. Kessler is an

opinion of Judge Norma Holloway Johnson of this District

Court. Defendants may rely on any of these opinions.

Other exhibits

Plaintiff also objects to exhibits 8, 14, 16-32,40,42, 43,47

- 61,63 - 74 on the grounds that they are inadmissible hearsay. As

this Court has noted previously and supra, evidence offered not

for the truth but to show that the reporter did not have actual

malice is not hearsay. See Mem. Op. at 7. However, only those

exhibits with which defendants were familiar are admissible.

Thus, defendants’ exhibits 17, 48, 49, 50, 59, and 60 are

inadmissible because defendants apparently did not rely on

them. Exhibit 63, a letter from the U.S. Department of Justice to

defendants’ attorney regarding an FBI investigation, is not

45a

Appendix B

probati ve of whether defendants had actual malice. It is not

admissible. Defendants’ exhibits 8, 14, 16, 18-32, 40, 42, 43, 47,

51-58, 61, and 64-74, are admissible to show what defendants

knew, not for the truth of the matters stated therein.’

C. Conclusion

The Court, for the reasons discussed above, finds plaintiff's

exhibit 18, and defendants’ exhibits 6, 17, 34, 35,48, 49, 50, 59,

60, and 63, inadmissible.

II.

Summary judgment is appropriate if the pleadings and

affidavits together show that there is no genuine issue as to any

material fact and that the moving party is entitled to ajudgment

as a matter of law.” Fed.R.Civ.P. 56(c); see also Anderson v.

Liberty Lobby. Inc., 477 U.S. 242, 247-48 (1986). To prevail on

a summary judgment motion, the nonmoving party must set forth

sufficient evidence “favoring the nonmoving party for a jury to

return a verdict for that party.” Anderson, 477 U.S. at 249.

In a libel suit, the plaintiff must demonstrate that the

statements complained of are (1) defamatory, (2) false, (3)

statements of fact, and (4) made with the requisite degree of

fault. Liberty Lobby. Inc. v. Dow Jones Co., 838 F.2d 1287, 1293

(D.C. Cir.), cert. denied, 488 U.S. 825 (1988). A public figure“

9. Defendants’ exhibits 20 - 28, 43, 47, 64 - 71, and 73 are transcripts or

notes from Unger’ s interviews. These are admissible to show what Unger knew,

not for the truth of the matters therein.

10. Plaintiff agrees that he is a public figure.

46a

Appendix B

must demonstrate by clear and convincing evidence that the

defendants made the defamatory statements knowing they were

false, or with reckless disregard of whether they were false or

not. New York Times Co. v. Sullivan, 84 S. Ct. 710, 726 (1964). To

survive a summary judgment motion, then, the public figure

must point to “record facts from which a reasonable jury could

find pursuant to a clear and convincing standard that the

defendants published” the “October Surprise” article with actual

malice. Secord, 747 F. Supp. at 785 (citations omitted).

Plaintiff must also demonstrate actual malice “in

conjunction with a false defamatory statement.” Tavoulareas v.

Piro, 817 F.2d 762, 794 (D.C. Cir.) (en banc) (emphasis in

original), cert. denied sub. nom. Tavoulareas v. Washington Post

Co., 484 U.S. 870 (1987). As defendants point out, the parties

have argued about what the challenged statements, as well as the

entire article, can reasonably be interpreted as saying, Plaintiff

contends that in addition to the statements set forth above,

“October Surprise” conveys the idea that he was an Israeli spy

and a traitor to his country, even though these words are never

mentioned in the article. |

It is not necessary for the Court to determine whether the

article defames plaintiff by implication to resolve defendants’

summary judgment motion. The Court need only focus on the

issue of whether the challenged statements, and any implications

therefrom, were made with actual malice. See Secord, 747 F.

Supp. at 783 (although court expressed doubt as to whether the

challenged statements were even defamatory, court only reached

issue of whether the statements were published with the requisite

degree of fault).

Finally, plaintiff must demonstrate actual malice separately

47a

Appendix B

with respect to each defendant. St. Amant v. Thompson, 88 S.Ct.

1323, 1325 (1968). Actual malice cannot be imputed from one

defendant to another absent an employer-employee relationship

giving rise to respondeat superior. Cantrell v. Forest City

Publishing Co., 95 S. Ct. 465, 471 (1974).

Relying upon representations that Unger made in

conversations with various interviewees, plaintiff argues that

Unger wrote his article as an Esquire reporter. Unger, however,

has averred that he was not an employee of Esquire Magazine’,

but rather was a freelance journalist hired to write “October

Surprise.” Thus, plaintiff cannot rely upon the theory of

respondeat superior to impute evidence of actual malice from

Unger to the editors and publishers of Esquire. See Secord, 747

F. Supp. at 787 (author was independent contractor; cannot

impute actual malice from author to other defendants). To

prevail, plaintiff must show with record facts that each defendant

acted with actual malice or raise a genuine issue of fact regarding

actual malice.

Satisfying the actual malice standard is very difficult fora

public figure plaintiff and plaintiff McFarlane fares no better

than other public figures before him. Assuming the truth of the

evidence upon which plaintiff relies, it is not sufficient to show

actual malice or to show that there is a genuine issue of material

fact regarding actual malice.

Most of the evidence upon which plaintiff relies involves

author Unger. Defendants do admit that

three experienced editors'' worked closely

ll. The editors were Articles Editor David Hirshey, Literary Editor Will

Blythe, and Research Editor Mark Warren.

48a

Appendix B

with [Unger] to synthesize the material

Unger had gathered on October Surprise.

They asked questions, made editing cuts, and

contributed some language. They held space

forcomment they expected from McFarlane,

but none came.

Defs. Mot. at 15 (emphasis in original). However, plaintiff is

unable to point to specific evidence demonstrating any actual

malice, or a genuine issue regarding actual malice, on the part of

Esquire or Hearst. In addition, holding in the al ernative to its

dismissal of Unger and assuming arguendo thet there is personal

jurisdiction over Unger, the Court finds that plaintiff is unable to

demonstrate that there is a genuine issue of material fact

regarding actual malice as to defendant Unger.

III.

Turning to the substance of the motion, defendants argue

that the neutral reportage privilege” bears on the actual malice

determination here and favors dismissal. The Court, in denying

plaintiff's partial summary judgment motion che issue of

truth, found that it was unnecessary to decide whether the neutral

reportage doctrine applied in this case because even if it did,

“October Surprise” would not be protected by it. See Mem. Op.

at 22. The Court determined that the article was not neutral with

regards to Ben-Menashe and in fact advocated his credibility,

even while quoting some detractors. Although the Court did

permit the parties to brief the issue again, defendants have not

presented any reason why the Court should change this

determination.

12. Under the neutral reportage doctrine, accusations against public

officials are privileged when published in an accurate and neutral manner. /n re

UPI, 16 Media L. Rep. (BNA) 2401. 2408 (D.D.C. 1989) (Richey, J.).

49a

Appendix B

Defendants also argue that the passage referring to Ben-

Menashe’s affidavit in the Inslaw case is protected by the fair

report privilege. The privilege is applicable to reports of an

official government proceeding, such as proceedings before any

court, and is arecognized exception to the common law rule that

“the republisher of a defamation is deemed to have adopted the

underlying defamatory statements as its own.” White v.

Fraternal Order of Police, 909 F.2d 512, 527 (D.C. Cir. 1990)

(citation omitted). Pleadings filed in judicial proceedings

qualify as official records under the privilege. Harper v. Walters,

822 F. Supp. 817, 824 (D.D.C. 1993); see Lavin v. New York

News. Inc., 757 F.2d 1416, 1419 (3d Cir. 1985) (privilege applies

to affidavits). Areport is privileged if it is a fair abridgment of the

underlying document and is properly attributed. See Phillips v.

Evening Star Newspaper Co., 424 A. 2d 78, 88 (D.C. 1980), cert.

denied, 451 U.S. 989 (1981).

Defendants argue that the following passage is

encompassed within the fair report privilege:

In a sworn effidavit submitted by Elliot

Richardso” on behalf of one of his clients, a

computer-software company called Inslaw,

Ben-Menashe states that both McFarlane and

Brian had a “special relationship” with

Israeli intelligence

Ben-Menashe’s Inslaw affidavit only states that McFarlane and

Brian had a “special relationship” with Rafi Eitan, however.

Unger avers that after reviewing a number of published accounts

describing Rafi Eitan as a leading intelligence official in the

Israeli government, he believed that “Rafi Eitan” was

synonymous with Israeli intelligence. Thus, defendants claim,

50a

Appendix B

although the term “Israeli intelligence” is not a direct quote, it is

an accurate paraphrase deserving of the fair report protection.

The Court previously found that it was a question of fact

whether a special relationship with Rafi Eitan was equivalent to

a special relationship with Israeli intelligence because of a lack

of evidence in the record. See Mem. Op. at 27-28 (defendants

relied upon inadmissible exhibits to support their assertion that

Rafi Eitan was Israeli intelligence). Although the question now

before the Court is whether defendants acted with actual malice,

to determine whether the fair reportage privilege applies

involves determining whether Rafi Eitan is synonymous with

Israeli intelligence. That is still a question of fact and defendants

have proffered no new evidence other than Unger's belief that

the two were the same. The privilege does not apply.

IV.

Regarding the actual malice determination, defendants

contend that the evidence of their state of mind prior to

publication precludes a finding of actual malice. The existence

or non- existence of actual malice must be determined as of the

date of publication. Secord, 747 F. Supp. at 792.

Prior to publication, defendants claim that they were aware

that McFarlane was linked to Israeli intelligence and to the

October Surprise. In an affidavit attached to the motion, Unger

stated that as part of his research, he read articles, books, and

other materials which raised concerns regarding the Iran-Contra

affair, the October Surprise controversy, and the Pollard scandal.

Many of these publications raised the same issues that Unger

later addressed in his article. See, e.g, Joel Bleifuss. “Agent

McFarlane,” Jn These Times, May 29-June 11, 1991 (“Last Week

51a

Appendix B

Ben-Menashe told House Judiciary Committee ires(igators, as

he had claimed in a sworn March 2) affidavit in the Inslaw case,

that McFarlane was a paid agent of Israel”) Def Ex. 29]. Unger

also knew or believed that former government ofiicials and other

journalists had used or were using Ben-Menashe as a source. See,

e.g., Gary Sick (former National Security Council staff

member), “The Election Story of the Decade,” V. J. Times, Apr.

15, 1991 [Def. Ex. 14]; The Election Held Hostage, PBS

Frontline television broadcast, Apr. 16, 1991 [Def. Ex. 8].

Defendants argue that Unger's good faith reliance on

“previously published reports in reputable sources . . . precludes

a finding of actual malice as a matter of law.” Dow Jones, 838

F.2d at 1297 (citation omitted).

Second, Unger knew that congressional investigators were

inquiring into Ben-Menasbe's allegations. Unger spoke with

Spencer Oliver during the early and mid-summer of 1991. Oliver

had interviewed Ben-Menashe to determine whether a

congressional investigation should be pursued into the

allegations concerning the October Surprise theory. In an

affidavit, Oliver states that BenMenashe made almost the same

allegations to him about McFarlane that were reported in Esquire

Magazine. In his conversation with Unger, Oliverreported that

Ben-Menashe had made these allegations. Oliver also told Unger

that he and other staff members of congressional committees

were exploring these allegations further. Two of the Esquire

editors involved in editing the piece testified in affidavits that

they were also aware of, and relied upon, the existence of

congressional investigations in publishing the article.

Defendants contend that their awareness of congressional

investigations based on Ben-Menashe’s allegations

demonstrates their lack of malice. See Tavoulareas, 817 F.2d at

791 (author had reason to believe source who had provided

52a

Appendix B

substantially the same information to congressional

investigators).

Third, defendants argue, other information seemed to

corroborate Ben-Menashe’s claims. Ben-Menashe told Unger

that the FBI was investigating McFarlane’s relationship with

Israeli intelligence and gave Unger FBI Special Agent Emmett

Cartinhour’s home telephone number. That Ben-Menashe had an

agent's home telephone number, Unger states, confirmed to him

that the FBI was taking Ben-Menashe seriously. Unger adds that

his telephone call to Agent Cartinhour also led him to believe that

the FBI was investigating McFarlane’s relationship with Israel.

In addition, defendants claim, Ben-Menashe’s credibility

was strengthened by the fact that his affidavit was submitted in

court in the Inslaw case by Inslaw’s attorneys, which included

Elliot Richardson, former Attorney Genera!. Unger also spoke to

Richardson, who told Unger that he took Ben-Menashe

seriously.

Fourth, defendants contend, there can be no actual malice

where Unger interviewed a number of people, none of whom

conclusively disproved any of Ben-Menashe’s allegations,

including those about McFarlane. Several of the people

interviewed by Unger did express doubt about Ben-Menashe’s

credibility: however, none apparently were able to disprove his

statements. There can be no actual malice in such a situation,

defendants argue. See Brewer. Memphis Publishing Co., 626

F.2d 1238, 1259 (Sth Cir. 1980) (reporter questioned two people,

13. Agent Cartinhour, when asked by Unger whether the FBI was

investigating McFarlane’s relationship with Israeli intelligence, said that the

FBI “neither confirms nor denies active investigations.”

53a

Appendix B

neither of whom disabused him of the allegations; shows that

reporter made an honest effort to test his belief), cert. denied, 452

U.S. 962 (1981). Moreover, Unger confronted the issue of Ben-

Menashe’s credibility head-on, defendants maintain, informing

his readers that Ben-Menashe had his detractors.

Finally, defendants argue, that Unger was never able to talk

directly to McFarlane is not evidence of actual malice. See

Secord, 747 F. Supp. at 789 (defendant's failure to consult with

plaintiff prior to publication is not evidence of actual malice). In

fact, according to Unger, he had attempted to get in touch with

McFarlane on at least six occasions, through telephone calls and

a faxed letter. In one teiephone message, Unger stated that he

wanted to ask McFarlane “about the allegations made about him

in the Inslaw case.” Thus, defendants maintain, McFariane knew

that Unger wished to ask him questions about the subject matter

of “October Surprise”.

Plaintiff's rebuttal can be summed up in several sentences.

First, plaintiff contends, defendants were reckless in relying

solely upon Ben-Menashe, even though they knew that he had no

firsthand knowledge, knew that he had acommercial interest in

making his allegations’, and knew that he was unreliable.

Second, Unger had a duty to corroborate the information and

lacking any corroboration, should not have published the

statements. Unger also expressed serious and persistent doubts.

as to the truth of the statements in “October Surprise,” but

published the statements anyway: according to plaintiff, Unger

was trying to “get” him. Moreover, piaintiff asserts, the

allegations about him are improbable; therefore defendants were

reckless in publishing them. Finally, defendants acted with

14. Ben-Menashe was working on a book.

54a

Appendix B

actual malice when they fabricated Elliot Richardson's

endorsement of Ben-Menashe and the October Surprise theory."

Plaintiff's evidence, however, is not sufficient to create an

issue regarding actual malice. As forrelying upon a single source

who may have been biased or unreliable, other courts have found

that type of evidence insufficient for actual malice. In

Tavoulareas, the Court found no actual malice where defendants

relied upon a single source who had made the same allegations

during a formal interview with investigators of a House

subcommittee. Tavoulareas, 817 F.2d at 791. In Secord, the

Court found no actual malice despite plaintiff’s claims that

convicted felons were the sources. Secord, 747 F. Supp. at 7194

(plaintiff must establish that “even in relying upon an otherwise

questionable source the defendant actually possessed subjective

doubt.”) (citation omitted).

While plaintiff argues that defendants had a duty to

corroborate Ben-Menashe’s statements, he ignores that Unger

did in fact attempt to do so. Furthermore, unlike cases on which

plaintiff relies, Unger apparently had no information at hand

which refuted the allegations nor did he have information which

should have caused him to investigate further. Compare Foretich

v. Advance Magazine Publishers, Inc., 765 F. Supp. 1099, 1109-

11(D.D.C. 1991) (defendants made no effort to investi gate two

specific assertions of fact by knowledgeable persons, which if

found to be true, would have discredited the published account;

15. Plaintiff also claims that defendants agreed by contract to a standard

more restrictive than the “actual malice” standard set forth in New York Times.

The contract stated that Unger would not “defame nor violate the privacy of any

person.” PI. Ex. 6. As defendants point out, plaintiff cannot be the third-party

beneficiary of such a contract. Plaintiff must demonstrate actual malice,

regardless of such a contract.

55a

Appendix B

some evidence of actual malice) with Tavoulareas, 817 F.2d at

797 (in the absence of evidence that defendant held “serious

doubts” about the truth, insufficient investigation alone may not

support a libel verdict) (citation omitted).

Unger did talk with Spencer Oliver and several other people,

none of whom provided information which c»iclusively

disputed Ben-Menashe’s Statements, and some of whom

supported or confirmed his statements. In addition, Ben-

Menashe’s allegations were probable enough for congressional

committees to investigate them. Thus, plaintiff’s claim that

actual malice is demonstrated because the allegations were

improbable is unavailing.

Unger did know that plaintiff disputed the substance of the

statements; however, this alone is not sufficient evidence of

actual malice. See Harte-Hanks Communications. Inc. y.

Connaughton, 109 S. Ct. 2678, 2698 n.37 (denials are so

commonplace that they “hardl y alert the conscientious reporter

to the likelihood of error.”) (citation omitted). He also attempted

to get plaintiff's comments about the Bea-Menashe allegations,

but plaintiff decided not to respond. See Newton v NBC, 930F.2d

662, 686 (9th Cir. 1990) (defendants tried to interview the

plaintiff; no evidence that they deliberately tried to avoid the

truth), cert. denied, 112 S. Ct. 192 (1991). Unger published that

McFarlane had declined comment.

Plaintiff argues, however, that it was false that he declined

tocomment and Unger knew it. Because that false Statement lent

credence to Unger’s charges, plaintiff claims, this is evidence of

actual malice.

McFarlane did decline to be interviewed. Whether this

56a

Appendix B

means that he declined to comment on whether he was an Israeli

spy, had been recruited by Rafi Eitan or was Mr. X. is aquestion

of fact. Mem. Op. at 30-31. However, that Unger stated that

McFarlane declined to be interviewed is not evidence of actual

malice. Unger knew that McFarlane declined to be interviewed

because Unger had attempted to talk with him. McFarlane had

also written Unger a letter stating that he “would be of little help”

to Unger. PI. Ex. 27 (letter dated June 12, 1991). Compare Airlie

Foundation. Inc. v. Evening Star Newspaper Co., 337 F. Supp.

421. 426 (D. D. C. 1972) (reporter knew that it was false that the

CIA had declined to comment but included it in the article

anyway).

Moreover, even assuming the truth of plaintiff's chy ges

that Unger was out to “get” him or thought he was a good target,

those charges are not sufficient evidence of actual malice. See

Tavoulareas, 817 F. ad at 795 (reporter’s remarks that he planned

to “get” plaintiff are “everyday parlance of an investigative

reporter,” not enough to show actual malice).

Finally, plaintiff argues that defendants acted with actual

malice when they fabricated Richardson’s endorsement of Ben-

Menashe. In that regard, the article states:

[a]nd former attorney general Elliott [sic]

Richardson, a staunch Republican who

emerged as the moral hero of Watergate after

he refused President Nixon’s order to fire

Special Prosecutor Archibald Cox and

resigned instead, has submitted sworn

affidavits by Ben-Menashe on behalf of a

client. Astandard legal gambit, perhaps, but

Richardson finds Ari Ben-Menashe a

57a

Appendix B

compelling witness. “I take him serious] yas

being who he says he is,” says Richardson.

“October Surprise” at 103.

Plaintiff maintains that Richardson did not submit Ben-

Menashe’s affidavit, that his words were falsified in the

October Surprise” article, and that Richardson did not believe

Ben-Menashe’s affidavit to be true. Thus, by bolstering Ben-

Menashe s credibility false] Y. plaintiff claims, defendants acted

with actual malice. See Sharon v. Time Inc., 899 P. Supp. 538,582

(S.D.N V. 1984) (possible misuse of attribution raises material

questions of fact regarding actual malice); Westmoreland u CBS

Inc. ; 596 F. Supp. 1170, 1174 (S. D. N. v. 1984) (reporter may de

liable if he knowingly or recklessly misstates the evidence to

make it seem more convincing than it is).

What plaintiff clearly ignores, however, is Richardson’s

affidavit which refutes each of plaintiff's assertions. Richardson

declares that he was Part of the legal team that submitted several

sworn affidavits of Ben-Menashe, including the one at issue

here. He also swears that the Statements and quotations

attributed to him in the article “accurately reflect this] views of”

Ben-Menashe. Finally, Richardson avers that he believed

portions of BenMenashe’s affidavit. Thus, there is no evidence

of actual malice on the part of defendants in quoting Richardson.

In summary viewing the evidence in the li

. a ight most

favorable to the nonmoving party, plaintiff has failed to point to

sufficient record facts to put defendants’ showing of an absence

of actual malice in dispute. Plaintiff is unable to demonstrate that

58a

Appendix B

endants entertained a “high degree of awareness of

ee — orareckless disregard for the truth such that

“a reasonable jury might find that actual malice had been —

with convincing clarity.” See Liberty Lobby Inc. v. Dow Jones

Co. Inc., 838 F.2d 1287, 1293 (D.C. Cir. 1988) (citations

omitted), cert. denied, 488 U.S. 825 (1988). Thus, for the reasons

discussed above, the Court grants the defendants’ motion for

summary judgment.

Appropriate Orders are attached herewith.

s/ Thomas A. Flannery

UNITED STATES DISTRICT JUDGE

59a

APPENDIX C — ORDER FILED JUNE 8, 1994

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil No. 92-0711 TAF

ROBERT C. McFARLAN E,

Plaintiff,

ESQUIRE MAGAZINE, er al.,

Defendants.

ORDER

This matter came before the Court upon defendants’ motion

for summary judgment. Upon consideration of the Parties’ briefs

and the arguments of counsel at the motions hearing, and for the

reasons set forth in the accompanying Memorandum Opinion, it

is this 8th day of June, 1994, hereby

ORDERED that defendants’ motion for summ ry judgment

be, and the same hereby is, granted: and it is further

ORDERED that this case is dismissed with prejudice with

costs to be awarded to defendants.

s/ Thomas A. Flannery

UNITED STATES DISTRICTJUDGE

60a

APPENDIX D — ORDER FILED JUNE 8, 1994

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil No. 92-0711 TAF

ROBERT C. McFARLANE,

Plaintiff,

ESQUIRE MAGAZINE, et al.,

Defendants.

ORDER

This matter came before the Court upon defendant Unger’s

motion to dismiss or in the alternative, for summary judgment.

Upon consideration of the parties’ briefs and the arguments of

counsel at the motions hearing, and for the reasons set forth in the

accompanying Memorandum Opinion, it is this 8th day of June,

1994, hereby

ORDERED that defendant Unger's motion to dismiss is

granted.

s/ Thomas A. Flannery

UNITED STATES DISTRICT JUDGE

6la

APPENDIX E — MEMORANDUM OPINION

FILED MAY 27, 1993

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil No. 92-0711 TAF

ROBERT C. McFARLANE,

Plaintiff,

ESQUIRE MAGAZINE, et al.

Defendants.

MEMORANDUM OPINION

This matter comes before the Court on plaintiff Robert

McFarlane’s defamation suit arising from an article written by

defendant Craig Unger entitled “October Surprise” and

published by defendant Esquire in October 1991. Jurisdiction of

the Court is based on diversity of citizenship under 28 U.S.C.

§ 1332. Plaintiff alleges that the article conveyed to the public

false and defamatory statements that Mr. McFarlane was an

Israeli spy and a traitor to his country. Plaintiff's prayer forrelief

includes compensatory and Punitive damages, in addition to the

costs of the suit.

There are several motions currently pending. This

Memorandum Opinion discusses plaintiff's partial summary

judgment motion on the issue of truth and plaintiff's request for

62a

Appendix E

sanctions. The Court will reserve judgment on defendant

Unger’s motion to dismiss for lack of personal jurisdiction until

the close of discovery. Upon consideration of the plaintiff's

motion, the defendants’ opposition, the plaintiff's reply thereto,

the oral arguments, and the entire record, the Court denies

plaintiff's motion for partial summary judgment on the issue of

truth for the reasons discussed below. The Court also denies

plaintiff's request for sanctions for the reasons discussed below.

Summary Judgment Motion

The “October Surprise” controversy revolves around

allegations that Reagan-Bush campaign operatives and

representatives of the Ayatollah Khomeini secretly agreed to

“delay the release of the American hostages held in Iran until

after the November 1980 election, thereby assisting in the defeat

of incumbent President Jimmy Carter.” In exchange, “the

Iranians were assured of later receiving supplies of American-

made military equipment.” Report of the Special Counsel: The

“October Surprise” Allegations and Circumstances

Surrounding the Release of the American Hostages Held in Iran,

U.S. Senate Foreign Relations Subcommittee on Near Eastern

and South Asian Affairs, 102d Cong., 2d Sess., November 19,

1992, p. 1. Defendants Exhibit 9). The Esquire “October

Surprise” article was only one of various articles and

publications to raise these allegations.

The title page to the “October Surprise” article states in

large letters, over the picture of blindfolded hostages:

The passages in

de fame him state:

63a

Appendix E

Eleven years ago this month, while no one

was watching, the CIA and the Reagan-Bush

campaign may have committed an act of

highest treason. Did they plot to delay the

release of the hostages from Iran and Steal a

presidential election? A tale of international

conspiracy and double-dealingl.]

In February 1980, Ben-Menashe says,

Robert “Bud” McFarlane, then an aide to

Senator John Tower, and Earl Brian, a

businessman who had been secretary of

health in Reagan's California cabinet, met

highly placed Iranian officials in Teheran. In

a sworn affidavit submitted by Elliot

Richardson on behalf of one of his clients, a

computer-software company called Inslaw,

[Ari]! Ben-Menashe states that both

McFarlane having been recruited by Rafi

Eitan, a legendary Israeli agent who was the

model for a leading character in John

LeCarre’s Little Drummer Girl. “McFarlane

was the famous Mr. X in the Pollard case,”

adds Ben-Menashe, referring to the trial of

Persistent allegations about another,

“October Surprise” which plaintiff contends

64a

Appendix E

unnamed American who secretly worked for

the Israelis.

Both McFarlane and Brian have declined

comment.

McFarlane and Brian's visit, Ben-

Menashe says, helped set up later meetings in

Madrid, which in turn paved the way for the

crucial October rendezvous in Paris.

Plaintiff asserts several grounds for its motion. First,

plaintiff contends that defendants falsely stated that he is an

Israeli spy, that he was the “famous Mr. X in the Pollard case,”

and that he went to Tehran with Mr. Brian. Second, defendants

falsely represented the contents of Ari Ben-Menashe’s Inslaw

affidavit, plaintiff asserts, in that the affidavit did not state that

plaintiff had a special relationship with Israeli intelligence, that

plaintiff was recruited by Rafi Eitan, or that plaintiff was Mr. X

in the Pollard case. Finally, plaintiff contends, defendants falsely

stated that he refused to comment upon any of the accusations

that he is a spy.

II.

Plaintiff agrees that he is a public figure. In a libel action

involving a public figure, before damages can be awarded, a

showing of “actual malice” is necessary: that the defamatory

statements were made knowing they were false or with a reckless

disregard of whether they were false or not. New York Times Co.

Sullivan, 376 U.S. 254, 279-80 (1964). The plaintiff bears the

burden of proof on two issues. First, the plaintiff must show by

65a

Appendix E

a fair preponderance of the evidence that the alleged! y

defamatory statement is false. Liberty Lobby, Inc. v. Dow, 838

F.2d 1287, 1292 (D.C. Cir. 1988), cert. denied, 488 U.S. 825

(1988); Liberty Lobby, Inc. v. Rees, 852 F.2d 595, 597-98 (D.C.

Cir. 1988), cert. denied, 489 U.S. 1010(1989). If the question of

truth or falsity is close, then the Court should err on the side of

nonactionability. Dow, 838 F.2d at 1292. Second, the plaintiff

must demonstrate by clear and convincing evidence that the

defendant published the defamatory statement with actual

malice. Id. Plaintiff's motion addresses only the first issue.

Plaintiff supports his motion with sworn statements by

McFarlane, Joseph E. diGenova, William H. Webster, and a

Freedom of Information Act request to the FBI with the FBI’s

response, as well as assorted documents. Defendants’ Opposition

contains 36 exhibits including affidavits from Ari Ben-Menashe

and Craig Unger, author of the article.

Both parties object to various exhibits. Defendants argue

that the admissibility of their exhibits may be irrelevant because

plaintiff's affidavits are insufficient to show the truth.

Specifically, defendants assert, given the ample body of publicly

available evidence which raises legitimate concerns regarding

malic: by clear and convincing evidence, citing Philadelphia Newspapers, Inc.

v. Hepps, 475 U.S. 767, 775-76 (1986) and New York Times, 376 U.S. at 286-91.

established by clear and convincing evidence or by a preponderance of the

evidence. Wie express no view on this issue.” Harte-Hanks Communications,

Inc. v. Connaughton, 109 S. Ci. 2678, 2682 n.2 (1989).

66a

Appendix E

the truthfulness of plaintiff's affidavit, it is inappropriate for the

Court to rely on that affidavit for purposes of summary

judgment. Under the Wilmington Trust case, defendants argue,

“prospective impeachment” is alone sufficient to defeat

summary judgment when

the disputed fact is (1) within the exclusive

knowledge of the movant, whose supporting

evidence is (2) subjective in character, and

(3) upon whom the burden of persuasion

rests.

Wilmington Trust Co. v. Manufacturers Life Ins. Co., 624 F.2d

707, 709 (Sth Cir. 1980). Plaintiff contends, however, that

whether he is an Israeli spy or Mr. X is not within his exclusive

knowledge, unlike Wilmington Trust where the witness was

admittedly testifying on a subjective issue. Mr. Webster’s and

Mr. diGenova’s affidavits, plaintiff asserts, also support his

case.’

As an initial matter, plaintiff has demonstrated a prima facie

case. Plaintiff's evidence, without considering any evidence

proffered by the defendants, including evidence to impeach

plaintiff, establishes that the statements in “October Surprise”

2. Plaintiff filed a Freedom of Information Act (FOIA) request for access

to FBI records pertaining to himself. The FBI responded that there were no

records responsive to plaintiff's request. The FOIA request and response,

together with the affidavits, plaintiff contends, establishes that there is no

connection between Mr. McFarlane and Israeli intelligence or Mr. Pollard. The

Court agrees with the defendants that the FOIA request and response have no

evidentiary value. The FOIA allows the FBI to treat any such documents, if they

exist, as non-existent due to national security concerns. Also, other agencies

may have documents regarding Mr. McFarlane.

67a

Appendix E

regarding plaintiff are false. However, after reviewing all of the

evidence, the Court denies plaintiff's motion for partial

summary judgment for the reasons discussed below.

III.

Evidentiary Issues

A. Defendants’ Exhibits

The parties disagree on the admissibility of evidence

proffered by defendants.’ The Court rules on the admissibility of

these exhibits as discussed below.

Exhibits I and 2. Ari Ben-Menashe’s Esquire affidavit and

Craig Unger’s affidavit

Plaintiff contends that Ben-Menashe’s Esquire affidavit and

Unger’s affidavit are inadmissible on hearsay grounds. Ben-

Menashe’s Esquire affidavit states that he “came across

information that” Mr. McFarlane was a paid Israeli agent, that he

was recruited by Rafi Eitan, and that he was Mr. X. Mr. Ben-

3. Plaintiff did not object to six of defendants’ exhibits: (1) Report of the

Special Counsel: The “October Surprise” Allegations and the Circumstances

Surrounding the Release of the American Hostages Held in Iran (Exhibit 9); (2)

Iran-Contra Investigation: Joint Hearings Before the House Select Committee

to Investigate the Covert Arms Transactions with Iran and the Senate Select

Committee on Secret Military Assistance to Iran and the Nicaraguan

Opposition (Exhibit 10); (3) Letter from Craig Unger to Robert McFarlane

dated June 12, 1991 (Exhibit 27); (4) Letter from Robert C. McFarlane to Craig

Unger dated June 12, 1991 (Exhibit 28); (5) Telephone log of Craig Unger

(Exhibit 29); and (6) Robert C. McFarlane, Overstatement, letter to the editor,

St. Louis Post-Dispatch (Exhibit 31).

68a

Appendix E

Menashe avers that this information, which he conveyed to Mr.

Unger, was the result of Israeli intelligence reports which he had

access to and of conversations with Israeli intelligence officials.

Mr. Unger avers that the statements and quotes attributed to Mr.

Ben-Menashe in the article were made to him by Mr. Ben-

Menashe.

Defendants argue that affidavits by a reporter and a

reporter's source can be admitted despite claims that they rely on

hearsay or that they are not based upon personal knowledge,

citing Liberty Lobby, Inc. v. Anderson, 562 F. Supp. 201, 203-04

(D. D.C. 1983), aff d in part, rev d in part on other grounds, 746

F.2d 1563 (D.C. Cir. 1984), vacated, 477 U.S. 242 (1986).

Plaintiff’s argument, defendants contend, would require

reporters to rely only on judicia!ly admissible evidence before

writing their stories and would impermissibly shift the burden of

proof to the defendants.

Defendants misread Anderson. In that case, the affidavits

were not offered for the truth but to show that the reporter did not

have actual malice. Id. Actual malice is not at issue in this

motion. Therefore, the affidavits must not rely on hearsay. See

Cormier v. Pennzoil, 969 F.2d 1559, 1561 (Sth Cir. 1992)

(“Neither the district court nor this Court may properly consider

hearsay evidence in affidavits and depositions.”).

Defendants also contend that Ben-Menashe’s affidavit is

admissible as opinion because personal knowledge does not

invariably require personal observation. Personal knowledge,

defendants assert, can come from any acceptable source, such as

records kept in the ordinary course of business or from a

recitation of conversations with others, citing M.B.A.F.B. Fed.

Credit Union v. Cumis Ins. Society, 681 F.2d 930, 932 (4th Cir.

69a

Appendix E

1982) (under Rule 602, evidence is inadmissible only if the Court

finds that the witness could not have actually perceived or

observed that which he testifies to). Thus, defendants assert,

Ben-Menashe’s affidavit is admissible because it relies on Israeli

intelligence reports and conversations with Israeli intelligence

officials, including Rafi Eitan.

Ben-Menashe’s affidavit does not qualify as opinion

testimony, either lay or expert. He is not stating his opinion inhis

affidavit but rather making assertions of fact concerning

plaintiff.* Additionally, Ben-Menashe’s assertions rely on

hearsay as well. Although defendants argue that Israeli

intelligence reports fall within Fed. R. Evid. 803(8), the public

records and reports exception to hearsay, there is no evidence to

support this assertion. Furthermore, while it is conceivable that

conversations with others could form the basis for personal

knowledge, there is no way to distinguish which portions of Ben-

Menashe’s affidavit rely on conversations and which rely on

intelligence reports. Therefore, the portions of Ben-Menashe 8

Esquire affidavit in which he states that he came across

information” concerning Robert McFarlane (H 6, 7) are

inadmissible.

With regards to Unger’s affidavit, those portions re garding

statements made to Mr. Unger by Mr. Ben-Menashe ({5) are not

hearsay.

4. In addition, defendants rely on Ben-Menashe’s statements to support

several of their statements of material fact. See discussion of plaintiff’ s request

for sanctions, infra.

70a

Appendix E

Exhibit 3: “The Election Story of the Decade,” by Gary Sick

The New York Times, April 15, 1991

Exhibit4: “The Election Held Hostage,” PBS Frontline

Television Broadcast Transcript, April 16, 1991

Exhibit 5: “Agent McFarlane” by Joel Leifuss, In These Times

Exhibit6: “Revelations of an Ex-Spy,” by Jan Roberts, The

Age, May 13, 1991

Exhibit 3, Gary Sick’s New York Times article, and Exhibit

4, the Frontline Transcript, were referenced in Mr. Unger's letter

to plaintiff in which he asked for an interview. Mr. McFarlane

responded that it was “a very busy time” for him and that he

would be of little help to Mr. Unger. “October Surprise”

subsequently reported that plaintiff had “declined comment.”

Defendants contend that Mr. Unger’s reference to Exhibits 3 and

4 in his letter to Mr. McFarlane put him on notice that he would

be one of the subjects in a story about the “October Surprise.”

Therefore, writing that plaintiff had declined comment on the

“October Surprise” allegations was accurate, defendants assert.

This contention assumes that plaintiff knew about or had seen the

article or the documentary and thus knew the references which

Unger was making. While the relevance may be slight, it is

enough to make the exhibits admissible for a limited purpose, not

for the truth of the matters stated therein.

Exhibits 5 and 6 simply repeat some of the statements from

Ben-Menashe’s /nslaw affidavit. For this reason, they are not

particularly relevant to this motion and are not admissible.

71a

Appendix E

Exhibit 7: “October Surprise,” by Craig Unger, Esquire

This document is admissible only to show what defendant

Unger said, not for the truth of any statement in it.

Exhibit II: An American Life: the Autobiography, by Ronald

Reagan

Defendants offer an excerpt from President Reagan's book

to show that Mr. McFarlane had ties with Israeli intelligence.

Defendants contend that this exhibit falls within the residual

hearsay exception under Fed. R. Evid. 803(24) as it has

“circumstantial guarantees of trustworthiness.”

While the excerpt arguably has “circumstantial guarantees

of trustworthiness,” it does not meet the other requirements of

Fed. R. Evid. 803(24). For example, the excerpt is not “more

probative on the point for which it is offered than any other

evidence which the proponent can procure through reasonable

efforts.” Fed. R. Evid. 803(24)(B). Testimony by plaintiff, and

the inferences to be drawn therefrom, are more probative on this

point than President Reagan’s book. Also, the excerpt does not

mention that plaintiff had contact with Israeli intelligence;

rather, the reported contact was with Israeli officials. This

exhibit is not admissible.

Exhibit 12: Statement of William Casey before the House

Permanent Select Committee on Intelligence.

November 21. 1986

Defendants offer Mr. Casey’s statement to show Mr.

McFarlane’s “special relationship with Israel.” Plaintiff

contends that this testimony of Mr. Casey, who was not cross-

72a

Appendix E

examined, is inadmissible without a showing that he had an

opportunity to develop his testimony, citing Fed. R. Evid. 802

and 804(b)(1). Defendants contend, though, that Mr. Casey s

statement is an important element in officially published reports

of acongressional investigation and further, that it casts doubt on

plaintiff's credibility.

This testimony is not admissible under Fed. R. Evid.

804(b)(1) because Casey was not cross-examined. Under Fed. R.

Evid. 804(b)(5)(B), this exhibit is also not admissible because it

is not “more probative on the point for which itis offered than any

other evidence which the proponent can procure through

reasonable efforts.” Testimony by plaintiff, and the inferences to

be drawn therefrom, are more probative on this point than Mr.

Casey’s testimony. In addition, this Court has recognized that

testimony before a congressional committee is “manifestly

hearsay. . . [and] inadmissible,” and would not fall within Rule

803(8)(C) which only

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